A week is a long time in banking. Two months are an age.
In early September, Sven Hagströmer, chairman of Avanza Bank Holding, the Swedish digital savings and investment platform, was delighted to announce the recruitment of Knut Frängsmyr as the new chief executive.
Coming from buy-now-pay-later firm Klarna, where he had most recently been chief operating officer and deputy chief executive following previous stints as chief financial officer and CTO, Frängsmyr’s experience in a fast-growing, innovative company held out the promise that he could lead Avanza in a new phase of development.
Founded by Hagströmer in 1999 to offer online stock trading and later expanding into private banking, Avanza is renowned for pioneering low-fee funds and for repeatedly winning customer satisfaction awards in Sweden.
Frängsmyr’s experience in a fast-growing, innovative company held out the promise that he could lead Avanza in a new phase of development
It trades at a premium to peers but with analysts starting to wonder about prospects for volume growth and margins.
“Early in the process of finding a new CEO for Avanza, we concluded that we were searching for a person with banking in the blood, technology in the head, customer service in the heart and the ability to drive change in the arms and legs,” Hagströmer stated.
“Knut essentially personifies this profile.”
After passing this intense physical, Knut took up the job on November 6. One week later, on November 13, he departed again. Or, rather, Avanza announced that after dialogue with the Swedish Financial Supervisory Authority (FSA) regarding previously issued penalties connected to reconstruction of a private property, the company had withdrawn the owner management suitability assessment of Frängsmyr as the new chief executive.
The board will immediately resume the recruitment process and in the meantime has appointed Gunnar Olsson, chief operating officer and deputy CEO, as acting chief executive.
Steady pair of hands
It's embarrassing for Hagströmer who had highlighted Knut’s educational background in law “and therefore deep understanding of the regulatory environment and the many requirements faced by financial companies today.”
Andrew Coombs, analyst at Citi describes the surprise management change as “clearly unhelpful,” although Olsson, having served as COO since March 2018, “is likely to be regarded as a steady pair of hands.”
Coombs points out that as part of its suitability assessment, the Swedish FSA collects information from the Swedish Police, the Swedish Companies Registration Office, the Swedish Tax Agency, the Swedish Enforcement Authority and undertakings that provide credit assessments.
He adds: “We expect that some investors may question why these issues were not picked up in background checks during the hiring process before Mr Frängsmyr was announced as CEO.”
But in the first hours of trading on the Stockholm exchange after the news broke Avanza shares were up 1.7%.
So, maybe no harm done.