Danske bank is reminiscent of the original trolls of scandinavian folklore, floundering from mishap to mishap destroying human prosperity. mistakenly overcharging 100,000 borrowers is its latest slip. a wealth management mis-selling scandal last year followed revelations of its involvement in a 200bn baltics money-laundering scandal. a better bank plan by chief executive chris vogelzang crashed another step forward on thursday, announcing 1,600 jobs were going.

A cost focus hardly surprises. bulking up its anti-money-laundering compliance processes has pushed danske out of sync with low-cost nordic peers. weighed down by rising loan loss provisions, expected returns on equity of 2 per cent this year will rank at the low end of european banks. danskes higher costs and the prospect of big fines marks it down at just 0.5 times book value, by far the cheapest of the big nordic banks.

A lead over the rest of europe in digital payments, and little devotion to investment banking, hold down nordic banks cost-to-income ratios. cash is used in nearly 80 per cent of european transactions, but only 10 per cent of payments in sweden and one in five in denmark.

Chart shows cost to income ratio showing nordic banks beat on costs, maintaining a premium on shares

Still, mr vogelzang has plenty of work to do. danskes cost-to-income ratio might fall below 60 per cent next year from its current 68 per cent. but its nordic peers look nimbler on this measure. last month swedish bank handelsbanken recognised that it lumbers around with too many branches. a decision to close half of them and cut 1,000 jobs could push its cost-to-income ratio to 48 per cent next year, think citi. denmarks digital payments pioneer dnb beats all with a 41 per cent cost-to-income ratio.

No wonder handelsbanken and dnb trade close to book value with returns on equity in the high single digits, far above danske. cost-cutting may trim that discount over time. but until some light is shone on the full cost of its latest legal worries expect danske to remain stuck in the market shadows.

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