Sweden's Handelsbanken to cut 800 jobs, pull out of Asia and Germany

Credit: REUTERS/Phil Noble

Handelsbanken said on Wednesday it would cut 800 jobs and pull out of Asia and Germany as it seeks to cut costs after restructuring charges dragged down the Swedish bank's third-quarter earnings.

By Niklas Pollard and Colm Fulton

STOCKHOLM, Oct 23 (Reuters) - Handelsbanken SHBa.ST said on Wednesday it would cut 800 jobs and pull out of Asia and Germany as it seeks to cut costs after restructuring charges dragged down the Swedish bank's third-quarter earnings.

The job losses would include both employees and consultants, many of them outside Sweden, spokesman Mats Olsson said.

The bank aims to curb costs after criticism of its spending on digital services and expansion abroad. It has also invested heavily in compliance to fight financial crime and money laundering, an issue that has shaken the Nordic bank industry.

The Stockholm-based bank said it planned to cut annual spending by about 1.5 billion crowns ($155 million) and booked restructuring charges of 900 million crowns in the third quarter.

Dented by the charge, net profit fell to 3.57 billion crowns ($369 million) from 4.11 billion crowns last year.

Analysts had expected earnings of 4.11 billion crowns, according to Refinitiv data. But the estimates did not include restructuring charges.

Shares in Handelsbanken, down marginally this year, fell 2.5% by 1002 GMT, reversing initial earlier gains on Wednesday.

Nordic banks shares were broadly weaker, which a banking analyst blamed on higher-than-expected costs for anti-money laundering measures, signs of an economic slowdown and tough competition.

Handelsbanken's strategy of expanding west rather than east, primarily in Britain, mean it has not become embroiled in Baltic money laundering scandals that have engulfed Nordic rivals Danske Bank DANSKE.CO and Swedbank SWEDa.ST.

But the Swedish lender, which has retained a large network of independent branch offices, has faced criticism over mounting costs for modernising IT systems and its overseas expansion.

Chief Executive Carina Akerstrom, who took the helm this year, had said in July that an ongoing review of the bank's operations was likely to result in job cuts.

The bank said on Wednesday it would gradually wind down its relatively small business in Asia and pull out of Germany, to focus instead on Nordic markets, Britain and the Netherlands.

Handelsbanken said it would also increasingly focus on areas where it already had a strong presence, such as mortgage lending and services for small- and medium-size companies.

It said it expected two thirds of cost cuts to be carried out by the end of 2020 with the final third implemented in 2022. It said the moves would shave about 500 million crowns off revenues.

The bank said it expected development spending in 2020 to remain at the 2.1 billion to 2.2 billion crown level anticipated for this year. It also said costs to combat money laundering would rise to around 1.2 billion crowns this year from 600 million in 2018.

JP Morgan said in a research note that Handelsbanken's restructuring plans were "a step in the right direction" but predicted cuts to average earnings estimates.

The bank's total costs, a closely watched metric, were also affected by restructuring charges. Total costs rose to 6.28 billion crowns from 5.16 billion crowns in the same period a year ago, higher than analyst forecasts for 5.46 billion crowns.

All Sweden's top three banks published results on Wednesday.

SEB SEBa.ST reported higher-than-expected third-quarter net profit amid robust corporate demand for its advisory services and lending business. Its shares also fell 2.9%.

"Despite a softening macroeconomic environment and a seasonal slowdown, clients remained active in the third quarter," said SEB Chief Executive Johan Torgeby said.

Rival Swedbank's dipped 6.5% after the bank said net earnings would fall more than expected due to costs to address money-laundering issues this year.

Nordea, which moved its headquarters to Finland from Sweden last year, is due to publish its earnings report on Thursday.

($1 = 9.6675 Swedish crowns)

(Reporting by Niklas Pollard and Colm Fulton; Additional reporting by Johan Ahlander; Editing by Johannes Hellstrom and Edmund Blair)

((Niklas.Pollard@thomsonreuters.com; +46 8 700 1110; Reuters Messaging: niklas.pollard.reuters.com@reuters.net))

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