As banks around the world have been forced to pare back headcount, Norway’s biggest bank, DNB has been the very model of consistency. But with profits forecast to fall, could staff numbers follow?
Last week, DNB decided to cut its return on equity target, which shows that its ambitions are faltering, and has said that it will follow Norway’s regulator’s demands to beef up its capital buffers.
“Today the situation is completely different,” chief executive Rune Bjerke said of the targets set over a year ago. “We have had a tsunami of new regulations and the macro economic situation is challenging … interest rates are down and new regulation has come up, we need to adjust the way the bank operates to that.”
The good news is that the new 2015 ROE target – 12% – still keeps DNB in the upper echelons of banks in Europe that have slipped into single figures this year. However, staff costs have been increasing, so it’s feasible that the bank could feel the need to scale back.
In the first half of this year, DNB spend NOK5.5bn on salaries and other staff costs, up from NOK5bn for the same period in 2011.
Over the course of last year, headcount increase by 500 to 14,072 and just 20 people have departed so far this year. With growth prospects more stunted, further cuts could be necessary.