STOCKHOLM -- Hafnia, the troubled Danish insurance and financial group, said it will fuse its two banking subsidiaries as a step in its sweeping restructuring plan announced in late August.

The plan calls for merging Hafnia Kapitalbank and Hafnia Erhvervsbank under the name Hafnia Bank. It will focus on portfolio management, securities, and

currency trading.

Lending is to be limited to areas related to the main activities, which include serving the insurance part of the business. Investment banking and other financing activities will be phased out, which is expected to reduce risk exposure.

The merger will lead to staff cuts, Hafnia said. It also expects that combining the banks will simplify its identity and marketing.

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