Ousted Eivind Kolding's troubled time at Denmark's Danske Bank

A fierce clash with the Danish regulator, a disastrous marketing campaign that ended in a public apology, tens of thousands of customers leaving, a battered brand: Eivind Kolding's 18 months in charge of Danske Bank have certainly been eventful.

However, after the waves of unremittingly negative headlines, the board of Denmark's biggest lender decided enough was enough and ousted the former shipping boss as chief executive.

In a strongly worded press release, the board decided they wanted somebody "with stronger qualifications within banking".

"There were just too many incidents to dismiss. It was one thing after another," says Nick Anderson, analyst at Berenberg.

Mr Kolding's ouster is also a reminder of the pressures Danske faces as the leading bank in perhaps the weakest of the Nordic economies with both its profitability and capital ratios lagging far behind Swedish rivals.

Ole Andersen, Danske's chairman and a former partner at private equity group EQT, insists there was "no individual events or economic circumstances" that led to Mr Kolding being forced out to be replaced by Thomas Borgen, a Norwegian who heads the lender's corporate business.

"This is something that has grown and matured over the last three to six months," he tells the Financial Times. "We need a leader to sit at the top of the table to drive our strategy and that is much better done if you have banking expertise and experience as your background."

Mr Kolding, the former head of Maersk Line, the world's largest container shipping group that happens to be Danske's biggest shareholder, had sat on the bank's board for 12 years with six as vice-chairman and one as chairman.

"There is a world of difference between being a board member of a bank 12 years ago and today. Having been a member of a bank board for 10 or 15 years does not qualify you to run a bank," says Mr Andersen.

Nonetheless, he insists that Mr Kolding was the best candidate 18 months ago and praises the former Maersk executive for helping devise Danske's new strategy. "I will also admit that how important banking competence is has changed over the past 18 months," he says, underlining that the decision was unanimous on the 13-member board.

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One thing that is undoubtedly different compared with the start of 2012 is Danske's image, which took a battering under Mr Kolding. It is ranked 125th out of 140 Danish brands, according to newspaper Berlingske's annual ratings, down from 94th when Mr Kolding took over.

Danske's ill-advised "New Normal" advertising campaign was only one problem. Mr Kolding was forced to apologise publicly after including a picture of a protester with a dollar bill taped across his mouth and "occupy" written on it that drew widespread public derision and anger. Mr Andersen admits it might have been better to engage with customers before launching the campaign, but insists it was misunderstood.

However, many Danske customers were irritated by plans to charge them for having an account, and 40,000 of them left the bank in the first half.

More serious for analysts was a recent clash with Denmark's Financial Supervisory Authority over how the bank calculates its risk weights. Danske took the unusual step of publicly criticising the regulator and even threatening legal action.

Mr Andersen says the bank is looking to get external validation of its methods. But he hints at a more emollient stance: "We would like to have the best possible relationship with the regulators." The regulators also appear hopeful that a change in chief executive could lead to a rethink of the complaint.

< > For all Mr Kolding's public mishaps, the bank's share price has done well, rising by a third since he took over in February 2012. The bank has also turned in a profit every year throughout the financial crisis.

However its returns are far behind Swedish peers such as Handelsbanken, Swedbank and Nordea even though they are reasonable by European standards. "That is Danske's problem: it is caught between those two zones. It's naturally compared with the Nordic banks but with the Danish krona pegged to the euro its economy shares many of the problems of the eurozone," says Berenberg's Mr Anderson.

Danske's Mr Andersen says much of the difference in how credit rating agencies perceive Swedish and Danish banks is down to government support with Copenhagen previously adamant its biggest banks - known as SIFIs and essentially Danske - would receive no backing.

"It's fair to recognise there is a difference between Denmark and Sweden. We have a disadvantage in Denmark. But recently I've heard a little more balanced views from the central bank," he says.

Tougher will be the target formulated under Mr Kolding to be in the top half of Nordic banks for return on equity by 2015. Danske is targeting 12 per cent by then but reached only 5.2 per cent in the first half, below 14.2 per cent for Handelsbanken and 11.3 per cent for Nordea.

There is clearly room for improvement but Mr Anderson is sceptical of Danske's emphasis on growth rather than the Swedish banks' focus above all on returns. "They seem very much on the growth path. I remain of the view that it's the strategy which is the issue, not the implementation," he says.

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