Borg rips Swedish banks over bonuses

Sweden’s finance minister Anders Borg lashed out at the country’s major banks and financial institutions on Friday for their hesitation to participate in the government’s financial sector support programme.

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“It’s imperative now that everyone participate in the system we’ve created. We can’t have banks wanting to secure bonuses for management and thus delaying the decision to participate. That means that the banks’ customers end up paying instead,” said Borg to the TT news agency.

He also noted his displeasure with the minimal mortgage rate reductions the banks have implemented thus far.

“These are relatively limited reductions, 20 points up to a half percent,” he said.

“I think individuals should contact their banks and ask them what they think. Are bonuses in the millions what’s important, or is it more important to bring down mortgage rates?”

Borg emphasized his concern that bank managers were putting their own interests ahead of the public’s in not agreeing to participate in the government’s support programme, which restricts executive pay.

“It’s time to join the [government’s] system and not let the question of bonuses stand in the way. The millions earned by certain individuals can’t be an impediment to financial stability. It’s important that we all keep an eye on mortgage rates and ensure that [this programme] is put in place, because it’s in the public’s best interests. The banks must deliver,” said Borg.

The finance minister also took aim at the leadership of the Carnegie investment bank, which is under investigation by Sweden’s Financial Supervisory Authority (Finansinspektionen).

“It’s time to settle up the bill for the excessive lack of responsibility we’ve seen. I’m thinking especially of Carnegie. In their case we have to ensure that the owners and not the taxpayers bear the burden of responsibility. We’ve got a clear message here. Banks that can’t handle [the crisis] and owners who don’t take responsibility will have to report to [Riksbank head] Stefan Ingves and [Swedish National Debt Office head] Bo Lundgren,” said Borg.

The National Debt Office (Riksgälden) is charged with managing Sweden’s banking crisis fund, while the Riksbank recently granted Carnegie a multi-billion kronor loan to help it overcome short-term liquidity problems.

“That’s a place where bank directors don’t want to be. It puts them in a vice and that’s how we intend on dealing with banks in crisis. And it’s also important to point out that the clock is now ticking, it’s time that shareholders take responsibility for this company and build the necessary stability. It’s something we’ll be following carefully,” said Borg.