* Danske's Irish unit focusing on wealthy, corporate clients
* Danske CEO says pulling back from mass banking in Ireland
* Danske could issue bonds, shares to pay back state loan
By Mette Fraende and Peter Levring
COPENHAGEN, Dec 8 (Reuters) - Danske Bank, which bought National Irish Bank in 2004, is changing strategy in Ireland, pulling back from high street banking to focus on wealthy and corporate clients, its chief executive said. CEO Peter Straarup also told Reuters in an interview that Danske Bank could offer bonds or raise capital when the time comes to pay back a 26 billion crown ($4.26 billion) loan from the Danish government.
"The Irish business will focus on private banking plus the bigger of the small and mid-size corporate customers," Straarup said on Wednesday. "We are pulling back from traditional mass banking when it comes to branches."
Danske, Denmark's biggest financial institution, has already closed half of National Irish Bank's branches.
"There is nothing attractive about having banks in Ireland at this time, but there will be a day after tomorrow," Straarup said in the interview.
"The alternative for us is to get the bank's costs down to a level where we will be profitable once the crisis is over, and to do what we can to defend any outstanding claims the bank may have," he said. "I don't think we have any other choice, and I think this is the right choice."
Straarup repeated that Danske Bank had no wish to sell National Irish Bank, nor try to expand further in the country through acquisitions.
LOW GROWTH, HIGH PROVISIONS
"The restructuring of Ireland will obviously take a number of years, likely about three to four years. But that does not mean that the economy will not show some progress, and we expect to see a small positive development in the Irish economy in 2011," Straarup said.
The crisis in Ireland has weighed on Danske Bank's results in the form of high debt provisions, which are expected to continue in the future, Straarup said, adding that he hoped such provisions peaked in the second quarter of 2010.
"We are of the opinion that what we are experiencing in Ireland, but also in the rest of Europe, could be relatively low growth for a long period ahead. It means that there could be challenges for the banking sector in a relatively long period to come with regards to loan losses and so forth," Straarup said.
"We do not expect our business in Ireland to show any growth worth mentioning in the coming 12 months," he said.
Danske Bank has about 90 percent of its business in the Nordic countries and little exposure in countries such as Greece, Portugal and Spain, Straarup said.
"But low growth in the euro countries contributes to keeping growth down in Denmark," he said.
Having borrowed $4.26 billion from the Danish state in 2009 through a state aid package, the group could look to raise funds once payback is due in April 2014, he said. Of the $4.26 billion, $354.6 million would be paid back in 2012.
"It cannot be ruled out that we will be in a situation where it will be interesting for the bank to offer convertible bonds, or, to an extent, raise capital when we will be paying our loan back to the state," Straarup said. ($1=5.640 Danish Crown) (Editing by Jon Loades-Carter)