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Swedish activist investor calls on Nordea to review wholesale operations

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Swedish activist investor calls on Nordea to review wholesale operations

Swedish activist investor Cevian Capital AB, which owns a 2.3% stake in Nordea Bank Abp, wants the Nordic lender to conduct a thorough review of its poorly performing wholesale banking operations, Bloomberg News reported.

Cevian's Managing Partner, Christer Gardell, told the newswire via email that the division has delivered substantially below-par returns and requires an increase in cost and capital efficiency, as well as the elimination of unprofitable businesses, to reach its potential.

Among Nordea's four main units, which include personal banking, commercial and business banking, asset and wealth management, and wholesale banking, had the worst first half performance, with its return on capital-at-risk at 6%, while the division's total operating costs as a percentage of total income was 67%, according to the report. At June-end, Nordea had 2,929 employees in its wholesale banking unit.

Meanwhile, Gardell said he was "very satisfied" with Nordea's decision to appoint Frank Vang-Jensen as president and group CEO earlier in September, replacing Casper von Koskull, who will retire by 2020-end. Gardell noted that should Vang-Jensen be able to fix the bank's inefficient operations, it should be able to generate the same level of profitability as its rivals, or about 12% to 14%.