This year will be “challenging”, Nordea chief executive Christian Clausen predicted today, as the bank revealed that more than half of its 2,000 planned job cuts have already taken place.
The bank announced last summer that it would be shedding 2,000 staff from its global headcount of 34,000.
In full-year and fourth quarter results unveiled today Clausen said this planned trimming of heads had gone according to plan during the fourth quarter, with the number of full-time employees reducing by 1,100 compared with the second quarter of 2011, and by 780 when compared against the end of the third quarter.
This had contributed to a reduction in staff expenses of some €80m during the year, while savings in IT expenditure had resulted in a further €20m of savings.
The bank’s severe cost targets – to keep a lid on costs during 2011 and then keep costs unchanged for a “prolonged” period of time – had also been met.
“Cost growth has declined and total expenses were at the same level in the fourth quarter as one year ago,” said Clausen.
“Our cost reduction initiatives proceed according to plan and will contribute to unchanged costs in the coming year,” he added.
Inevitably this meant performance-related pay at the bank was muted during the year.
With the approach of bonus season, provisions for performance-related salaries in the fourth quarter were €60m, compared to €49m in the previous quarter.
Overall, however, calculated provisions for bonuses in capital markets, investment banking and asset management – those areas directly exposed to international competition and therefore requiring performance-related incentives to ensure a continuing flow of high-class talent – declined during the year, decreasing to €141m, compared with €169m in 2010 (and €212m in 2009), of which approximately €43m was being allocated to bankers in Sweden.
“Nordea’s ambition is to have competitive remuneration schemes, but not be market leading,” the bank said.
In these areas, the payout ratio, or total staff costs including fixed salaries and bonuses in relation to total income was 18.9% in 2011 compared with 17.1% in 2010, it added.
“Nordea thus continues to have payout ratios at significantly lower levels than most international peers. The bonus in relation to total income decreased to 4.6% in 2011 compared to 5.3% in 2010,” it continued.
Bonuses were equally under pressure in other areas of the business, with total allocations for the year falling to €87m compared with €97m in 2010.