DANSKE BANK

Danske Bank is Denmark's largest financial institution. It is also in trouble, as today's events have shown; Eivind Kolding, its Managing Director, was fired this morning with immediate effect.

Mr. Kolding originally came to Danske Bank from the shipping conglomerate A.P.Møller Mærsk, which (wrongly, in my view) still has a sizeable shareholding in the bank and tends to informally vet its big decisions. But he came as Chairman, not Managing Director, and his major task was to find a replacement for the then Managing Director, who had been at the helm for more than a decade. In one of those slightly bizarre happenings (think Dick Cheney and the Vice Presidency) the selection committee with Mr. Kolding at its head could find nobody who was suitably qualified. Instead, they came up with him as the best person to lead the bank out of the financial crisis, even though he had absolutely no banking experience. He started work in February 2012 with the unanimous backing of the Board, a Board in which the then Deputy Chairman moved up to become Chairman.

It is that Board which today unanimously fired Mr. Kolding on the grounds that, er, he had no banking experience. When reporters pointed out that he now in fact had more banking experience than he had had when that same Board appointed him eighteen months ago, there was a lot of wriggling and weasel words. Basically, they had made a big mistake before; better to accept that and try something different. The new man, Thomas Borgen, is an insider, who probably felt hard done by, when he was passed over for the top job back in 2012.

Whether he will do a better job than Mr. Kolding is uncertain. Danske Bank has the predominant market position in Denmark, but it is also suffering from a terrible reputation, with customers leaving it in droves. There has also been a marked turnover of personnel amongst the upper echelons of the firm. Neither factor makes for a happy workplace.

During the noughties, Danske Bank enjoyed a position both of knowing how to manage money, and of knowing better than the average Dane. Catastrophic investments, notably in Ireland, big losses and now personnel disputes, have shredded that reputation. Yet another example of hubris in the financial sector.

Walter Blotscher