Danske Bank A/S has put on hold hiring new employees as it grapples with higher compliance costs and a low interest rate environment in Europe.
The Copenhagen-based lender has been the subject of international scrutiny over the alleged involvement of its tiny Estonian branch in funneling billions of euros of dirty money. Costs have risen especially relating to anti-money laundering and financial crime control, a spokesman told S&P Global Market Intelligence.
In July, the bank revised its outlook for expenses for 2019, to be in the range of 25.5 billion Danish kroner to 26 billion kroner, from around the same level in 2018, when operating expenses totaled 25.01 billion kroner.
The spokesman also attributed the hiring freeze to "low rates, low margins and challenges related to digital transformation." A low interest rate environment will likely continue for longer than expected after the European Central Bank in July signaled further rate cuts. The bank is also expected to spend approximately 400 million kroner, pretax, in compensating overcharged customers of its Flexinvest Fri product.
However, the bank will continue to hire for "business-critical" positions, such as regulatory functions, the spokesman noted.
Danske Bank will release its third-quarter financial results Nov. 1.
As of Oct. 9, US$1 was equivalent to 6.80 Danish kroner.
