The Nykredit Group now takes additional steps to adjust to future financial markets in which the conditions for financial business are changing rapidly.
– We need to rethink our approach to customers, products, day-to-day operations and capitalisation entirely. The "good old days" are over. With the initiatives published in recent months and our current reorganisation, we have made provision for this development, says Peter Engberg Jensen, Group Chief Executive.
Nykredit's measures include organisational and operational changes aimed at providing customers with new opportunities as well as growing earnings, strengthening the capital structure and future-proofing the Danish mortgage model. Nykredit's Strategy 2013 based on two core business areas – banking and mortgage lending – remains the foundation of the Group's business model.
The new measures combined with previously published initiatives lead to the implementation of:
- Customer focus is strengthened by amalgamating Nykredit's 57 retail and 34 commercial centres
- Nykredit opens a new central advisory centre, Nykredit Direkte®, that will offer customers the full range of advisory services online, by e-mail and telephone during opening hours twice as long as the ordinary opening hours of banks and mortgage lenders.
- As a result of the lower economic activity, Nykredit will, as previously announced, reduce cost levels by DKK 400 million.
- As part of the cost reductions, staff numbers will initially be reduced by 75 staff and managers in the staff and support functions and in coming months by 50 managers in the line organisation. Today the Group has 4,000 staff.
- Nykredit will set a digitalisation target of 90% for 2015
- New pricing and product structure in the home finance area involving eg combined mortgages
- As at 1 April 2012, all mortgage loans will be offered through Nykredit's subsidiary Totalkredit.
Retail and Commercial Customers are amalgamated
Nykredit aims to simplify its customer organisation, and the retail and commercial centres will therefore be amalgamated under one unified organisation and management. The current structure with Nykredit centres in nearly 60 large Danish towns will be continued, but the local retail and commercial centres will in future be operating as combined units. The simplified organisation allows Nykredit to optimise the customer potential in the cross field between the retail and the commercial areas and to reinforce its profile as a bank focusing on customers' needs and requirements.
Nykredit Direkte® – new central advisory centre
Nykredit explores new paths for the benefit of all the customers who prefer to handle their daily banking business over the telephone, by e-mail or online, but who do not offhand require personal contact with a Nykredit centre.
Nykredit sets up new central advisory centre, Nykredit Direkte®, based on a brand new concept involving up to 200 staff. The new advisory centre will offer customers full availability of professional advisory services during significantly extended opening hours. The team of advisers will be accessible by telephone, e-mail or online during 67 weekly opening hours in total.
Individual customers may have their own personal adviser. Nykredit's objective behind Nykredit Direkte® is to strengthen the dialogue with customers and thus also expand the business potential with customers.
Nykredit Direkte® will be located in Copenhagen and Århus.
Cost reduction completed
In connection with the presentation of the H1 Interim Report in August 2011, it was established that the baseline activity level has decreased permanently. In consequence, Nykredit announced plans to reduce costs by some DKK 400m.
The process of implementing such cost reduction has been ongoing since then, and the reduction has now been factored into the Group's budgets.
The cost reductions affect areas such as IT, marketing and other operating costs, and the Group maintains its "intelligent hiring freeze", and only essential job vacancies are filled again. These measures have had a significant effect on future cost levels.
Staff reduction
Unfortunately, it has not been possible to avoid an immediate reduction of staff numbers. As a consequence of the organisational measures such as the amalgamation of the Retail and Commercial Customers areas and achieving the above-mentioned cost reduction targets, the overall staff of approx 4,000 will initially be reduced by 75 staff and managers in the staff and support functions. In addition, the line organisation will be reduced by 50 managerial positions in coming months.
In accordance with the rules governing this area – negotiations on the reductions have been conducted with the staff union.
Nykredit sets digitalisation target
Part of Nykredit's strategy is to introduce digital solutions supporting and supplementing all channels – sales/service/production as well as personal customer services and self-service.
In line with public authorities, Nykredit is currently setting digitalisation targets.
In 2015 digital solutions should be in use for at least 90% of Nykredit's communication with customers.
This means that Nykredit, as customers' digital partner, will provide and obtain information digitally, conclude and sign agreements digitally, offer customers digital access to relevant information and documents and present information and processes digitally to create value and transparency.
Future home financing
As previously announced, Nykredit and Totalkredit are implementing a new price and product structure in the area of home mortgage financing. These initiatives should also be seen as elements aimed at securing Nykredit's market position.
The backdrop is the significantly changing conditions for financial business, involving stricter and much higher capital requirements. To this should be added the necessity of improving Nykredit's business profitability.
The Nykredit Group's measures include as previously announced:
- Price rises on existing and new mortgage loans granted by Nykredit and Totalkredit from 1 April 2012. From the same date, new Nykredit mortgages will be sold through the subsidiary Totalkredit.
- Under the new price structure, prices differ according to risk. As a result, the administration margin of ARMs and interest-only loans will be slightly higher than that of fixed-rate repayment loans.
- Nykredit and Totalkredit introduces combined mortgages for retail customers. A combined mortgage involves a mortgage loan subject to the rules governing SDO bonds ("særligt dækkede obligationer") for the part up to a 60% LTV and a mortgage loan funded by traditional RO bonds ("realkreditobligationer") for the part within a 60-80% LTV. This will mitigate additional collateral requirements in case of decline in property prices.
Finally, as previously mentioned, the Group has plans to discontinue the offering of ARMs with 1-year interest reset ("F1") and interest-only loans with respect to the mortgage loans offered within a 60-80% LTV. This will slightly increase the cost of housing finance overall, but it will also ensure principal repayments on the debt from the beginning. Combined mortgages will be introduced in Q2 this year.
Contacts:
Peter Engberg Jensen, Group Chief Executive, or Nels Petersen, Head of Corporate Communications, tel +45 44 55 14 70 /+45 20 22 22 72.
