UPDATE 2-Danske Bank ousts CEO Kolding after less than 2 years at helm
* Danske Bank says to replace CEO Kolding
* Appoints head of corporate banking Thomas Borgen
* Shares rise 2.6 percent
COPENHAGEN, Sept 16 (Reuters) - Denmark's biggest lender Danske Bank ousted Chief Executive Eivind Kolding after one-and-a-half years in the job, a period when the bank had no profit growth and was widely criticised over a new advertising campaign.
The bank, which has not paid a dividend in five years, said on Monday that Kolding would be replaced by Thomas F. Borgen, head of its corporate and institutional banking unit.
"It is, in this phase, necessary to have a chief executive officer with stronger qualifications within banking," it said in a statement.
"Thomas F. Borgen is an experienced and customer-oriented banker, who knows how to run a modern bank," chairman Ole Andersen said.
Danske Bank has struggled to recover as quickly as its Nordic peers, hurt by a burst property bubble as well as a struggling agriculture sector that has left Denmark teetering on the edge of recession for the past year.
Kolding, who had been with Danske since 2001, was made chief executive in February 2012 after holding the positions of deputy chairman and chairman. He joined the bank after more than a decade at Danish oil and shipping group A.P. Moller-Maersk .
Since he became chief executive, the bank's pretax profit has been largely flat while loan impairments have nearly halved. Danske's return on equity is far lower than that of its Nordic peers. Its profitability in the second quarter of the year was 6.2 percent, compared with rival Nordea's 11.5 percent.
Since Kolding started as CEO, 1,179 jobs have been cut and 218 branches have been closed, reducing the total number to 409.
In the same period, shares in Danske Bank have risen about 28 percent against a 31 percent rise in the Copenhagen stock exchange's benchmark index and a 22 percent rise in the European banking index.
In the second quarter of this year, the bank cut its outlook for the year.
Kolding was in charge of a TV and print advertising campaign launched last year which featured pictures from the Occupy Wall Street movement - provoking a barrage of criticism on social media for using the anti-capitalist protest to promote the bank. Danske withdrew that particular part of the campaign.
Danske Bank's shares were up 2.6 percent at 1052 GMT against a 0.7 percent increase in the Copenhagen stock exchange's benchmark index and a 0.6 percent rise in the European banking index.
"What they need going forward is a chief executive with more operational banking experience than Eivind Kolding," said Alm Brand analyst Jesper Christensen.
In June, the bank suffered a blow after Danish regulators demanded it set aside more cash to cover risk.
"They were chastised over risk weights, and chastised over risk management, so it does feel like the CEO didn't have control over these things," said Nick Anderson, analyst at Berenberg Bank.
In 2001-2009, Borgen headed Danske Bank's Norwegian unit, Fokus Bank ASA. In 2009, he was appointed head of International Banking Activities and Danske Markets and in the same year he also became member of the Executive Board of Danske Bank.
"The interpretation is that the bank is taking action and is willing to do something about it now that they do not see Kolding as the right person to face future challenges," said Jyske Bank analyst Christian Hede.
"Thomas Borgen has the right qualifications, primarily seen in the light of his years at Fokusbank which did very well," Hede said. "He will be the man executing the plans," Hede said. Kolding will step down immediately.