Danske Bank SWOT and PESTLE Analysis

Strengths

1. Strategic partnerships: In the personal banking segment, there were strategic partnerships made with Saco and TCO to meet the specific needs of the customers in Sweden. In Norway, partnerships were developed with Akademikerne to serve customers better. In Finland, Danske bank signed an agreement with the 5 major affiliates of Akava, the Confedration of Unions for Professional and Managerial Staff in Finland, to collaborate on the customer lifecycle and services development.

2. Strong capital management policies: Capital management policies are strong for Dansk bank ensuring that it can sustain economic downturns. Common equity tier 1 capital of Dansk bank has exceeded the requirements by 4.2 indicating its ability to survive an economic crisis. The minimum common equity tier 1 requirement was set as 12.1 as against the achieved CET1 capital ratio of 16.2.

3. Strong compliance: Strengthened compliance organization by establishment of global function to identify for any cases of money laundering, financing of terrorism, customer tax evasion and market abuse activities. It also ensures strong compliance to Supervisory Diamond which was setup by the Danish FSA. Supervisory diamond is based on five characteristics of banks which can be used to gauge the financial stability of the bank. The 5 characteristics are based on excess liquidity coverage, commercial property exposure, funding ratio, lending growth and sum of large exposures. Danske bank have fared well on all the 5 parameters.

4. Strong local roots: Danske Bank was setup in 1871 and had grown through mergers with many local and regional banks over the period of 145 years to become one of the largest banks in Denmark. The bank, because of its size, has a great impact on the society and has worked towards the growth in the society.

Weaknesses

1. Inorganic growth and efficiency: International operations were expanded through acquisitions. This could have caused the ineffeciencies in the organization structure. The organization is currently trying to improve efficiencies by merging activities in Finland and thereby trying to achieve a uniform organizational structure throughout Nordic region.

Political

1. Movement of headquarters from Sweden to Finland: Danske bank moved its headquarters from Sweden to Finland. This move brings in challenges for the government and also brings Danske bank to a new set of regulations away from Sweden’s tough set of regulation. Danske bank will now come under the regulatory area of European Central Bank. But the Danske bank is a large bank for the small country. Finnish government will now hold the responsibility to ensure that first 100000 euros are guaranteed, failing which, if a rescue mission is required, Finnish government will have to rely on its taxpayer’s money. The situation demands that government comes up with a scheme which ensures the protection of deposits.

Economic

1. Uncertainties in economy: Uncertainty in economic growth and lower interest rates have continued challenge the business. GDP growth rates in Denmark, Norway and Finland were modest. But GDP growth started decelerating in Sweden. These economic factors have caused a negative impact on the earnings of the organization.

2. Startups and MSMEs: Danske bank reduced barriers for entry for start ups by facilitating access to funding, talent and advise. The Hub, a platform developed with Rainmaking Loft, served as an online portal for entrepreneurs to hire the employees. Apart from providing recruiting opportunities, the platform also provides investor guidance. DKK 1 billion worth of fund was setup to provide equity loans to SMEs. Start ups and MSMEs play an important role in the economy.