Financial management

The Danske Bank Group aims to match best practices in financial management.

Group Finance & Business Analysis is the department responsible for the financial management of Danske Bank.

Financial concepts
The Danske Bank Group continually develops its financial concepts. The Group's financial management is currently based on:

• Risk-adjusted performance measurement
• Balanced Scorecard (BSC)
• Activity Based Costing (ABC)
• Service Level Agreements (SLA)
  
  

It is the Group's policy to focus on the cost of capital for current and future activities. The Group's results are viewed in terms of risk adjustment. Measurements take ratings and the individual character of the business areas into account.

BSC is a strategic management tool that takes into account all aspects of an organisation from vision and strategy to the performance of the individual staff member. This is supported by performance agreements with the individual staff members.

ABC is an activity based cost allocation system, which is implemented in all relevant units of the Group.

The exchange of services between Group units is documented in SLAs, some of which regulate services and prices in great detail.

Processes
Two of the processes central to financial management at the Danske Bank Group are the closing of the accounts and the preparation of budgets.

We are constantly improving the process of closing the accounts to reduce the time spent. During the past three years, we have reduced the number of days significantly.

The Group revises its budget three times a year in connection with the preparation of the quarterly accounts. The revised budget, which we call an estimate, is used both for the Group's official outlook and for internal management purposes.

The budget process has three phases:

1.	Expectations about results are reconciled with a financial target for the year ahead. This target includes sub-targets set by the Executive Committee for a number of key figures. The targets are announced to all budget areas.
2.	Determining the extent of back-office functions for the year ahead. We use input from ABC analyses in this process, looking at both prices and volumes. The Group uses a virtual internal marketplace to manage this process.
3.	Detailed budgeting by departments and areas using various accounts and accrual bookkeeping. The Group uses a number of key figures to validate the budgets during preparation.

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Last updated on July 24, 2008