, Contributor

Consultant și analist de risc politic, CEO Smartlink, fost Policy Manager la Google Bruxelles

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Nordic banks, scandals and reputation rebuilding

The story is simple: the most important Nordic banks are involved in a Baltic money laundering scandal that saw hundreds of billions of Russian-tainted euros flooding the international market in the absence of proper supervision and risk assessment.
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The reputation of Swedbank, Danske Bank and Nordea Bank, so carefully and painstakingly built over time, is on the line, together with the one of the entire banking systems of the Scandinavian countries. Greed and corruption appear to be operating in contexts that were, until recently, considered rather shielded from these corrosive practices. From a reputation standpoint, the question is how could these banks bounce back and regain the trust of domestic and international stakeholders. I offer here a few points that could inform the conversation.


Reputation is an often-misunderstood concept and this has mainly to do with the misperception of its consequences. With societies becoming increasingly post-materialistic, the demands from the business world have changed and diversified – an ethical behaviour and a genuine contribution to the public good are on the top of the agenda of today’s consumers and at the core of millennials’ life principles. The bar is even higher for the banking sector, which has always struggled, some would say understandably, to escape the mistrust of the public. My point is that, more than ever, a reputation shock could be enough to bring down even MNCs whose resilience has never been questioned before. We speak maybe too much about unicorns these days, but we forget the other side of the “creative destruction”: there are not only unicorns, but also “dinosaurs” on the brink of business extinction.


Trust is hard to gain and easy to lose, so reputation management in times of crisis becomes vital. Structural breaks, such as the one that has taken the Nordic banks by storm, ask for less staged interventions and more of a strategy that gets at the positive facets of vulnerability – a form of reputation rebuilding through reinvention. With every reputation crisis that I have added to my portfolio, I have increasingly come to believe in the power of a simple, but efficient model, the one of the 3Rs: Reassure, Reimagine, and Reconnect. Let me tell how this works.


1. Reassure and reassess. The option for half-truths and cover-ups, which is often the go-to solution in times of existential crises, is like drilling holes to save a sinking ship – it is not only not working, but it will speed up the collapse. Today’s public statements will shape tomorrow’s available choices; the goal is to expand the list of available options, not to be caught in a corner. It makes sense to pay close attention to the stock exchange, but putting the things into the long-term perspective matters even more. To give some examples, declining responsibility and any association with money laundering activities, as some of the involved banks have done initially, is more than the symptom of failed risk assessment – it is the sign of dishonesty and of the inability to adapt and transform. Showing the maximum possible degree of transparency (e.g. what the company knows and what it does not know) and fully cooperating with the public and the authorities to find the truth is the way to go. This reassures the key stakeholders, while indicating that a full and careful evaluation is coming. Otherwise, one will end up like RBS, paying fine after fine and being at the mercy of the regulators; however, not everyone has the business clout RBS enjoyed.


2. Reimagine. If you don’t like how the table is set, turn over the table, House of Cards classics would say. Major reputation crises are not the time for damage control – this is like going to war with a fork. These moments require bold moves and sweeping changes – something similar to what Wells Fargo in the US is trying to do, starting with the persona of the new CEO, just to leave behind the reputation of a toxic culture. Embrace and acknowledge the shortcomings, but make them part of a bigger reinvention story – the captive attention is a great anchor for driving home the message of fresh start.


3. Reconnect. Trust crises are important because they go beyond the circumscribed or narrowly defined business environment. They trigger societal and, for the major actors, even global consequences. The public is angered, usually asking for clear answers and sizeable punishments. Those who reject the need to reconnect with the broader society by sealing off the sources of crisis will do this at their own peril. For example, as some have suggested, the Nordic banks, after thorough analysis, are in the position to spearhead a new regulatory framework in the European Union that will address money laundering, the role of tax havens and the Russian attempts to weaken the West. Let’s hope in the power of the silver lining.

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