By Dominic Chopping
Danske Bank AS (DANSKE.KO) on Monday dismissed executive board member and Head of Danish Banking Jesper Nielsen for his part in the mismanagement of a financial product that overcharged its customers.
Fees for Danske Bank's Flexinvest Fri product were raised in July 2017. In a statement Monday the bank said that interest rates at that time were low and expected returns were similarly low.
"In this perspective, the management decisions caused the fees to be set at too high a level in relation to the expected returns, Danske said. This meant that fees were too high for all customers, and it made the product unsuitable for some customers.
Fees weren't lowered again until November 2018.
The matter affects about 87,000 customers in Denmark, and Danske expects to pay out a total of around 400 million Danish kroner ($61 million) in compensation.
Danske is currently being investigated by Estonia, Denmark, France and the U.S. about allegations that around $230 billion in suspicious funds from Russia and other former Soviet states entered Europe through its tiny branch in Estonia.
As a result, then-CEO Thomas Borgen resigned amid the scandal and Mr. Nielsen filled in as interim CEO until a few weeks ago when former ABN AMRO Bank NV executive Chris Vogelzang took over.
"Jesper Nielsen has made significant contributions to the bank throughout many years, most recently as Interim CEO, for which we thank him," said Chairman Karsten Dybvad.
"But, in the specific matter, he was at the time one of the responsible executive board members who did not to a sufficient degree ensure that the Flexinvest Fri product was suitable for the bank's customers. Therefore, we find that Jesper cannot continue in his position."
Until a replacement has been found, Glenn Soderholm, head of banking activities in Norway, Sweden and Finland, will also take responsibility for banking activities in Denmark.
The Danish Financial Supervisory Authority has been informed and is currently looking into the matter. "In this connection, we expect to receive justified and severe criticism from the FSA," Danske concluded.
Write to Dominic Chopping at email@example.com; @domchopping @WSJNordics