Nordea to write down EUR735m in IT and cut further jobs

Nordea to write down EUR735m in IT and cut further jobs

Nordea has plunged into the red after plans to slash jobs and centralise its IT operation contributed to a EUR1.3 billion impairment charge in the third quarter.

The Q3 operating loss of EUR421m includes an impairment charge for IT intangibles of EUR 735m, a restructuring provision of EUR 204m, an additional loan loss provision of EUR 282m and an expense related to the sale of Luminor shares of EUR 75m.

The Nordic lender has developed a new business plan, including new financial targets, updated business plans for each business area and the further consolidation to a global IT platform, which triggered a full impairment test of Nordea’s capitalised IT systems. It is expected that the new business plan will lead to "continued redundancies" across the business.

A restructuring plan in 2017 included ambitions cut 6000 jobs and boost IT spending by 30-35% over the next four-to-five years.

In its financial statement, the bank says: "It has been concluded that an impairment of IT systems is required following that the expected lifetime of some IT systems is significantly shorter than earlier expected and that full benefits consequently cannot be realised, and that it in some cases has been decided to stop the current development or use of the functionality. The impairment recognised in the third quarter amounts to EUR 735m.

"Following up on the 2017 restructuring plan, it is furthermore expected that the new business plan will lead to continued redundancies with related redundancy packages. The new business plan has triggered the recognition of a provision amounting to EUR 204m in Q3 2019."

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