Following a weekend meeting, Swedbank’s board of directors opted to rescind a proposal to pay shareholders a dividend of 4.50 kronor ($0.49) per common share 2.40 kronor per preferred share.
“Our task is to ensure the best interests of the bank. This proposal would further strengthen our capital base by 2.9 billion kronor and increase the financial strength in challenging times. We are confident that this decision will be beneficial for our shareholders in the long term, said Swedbank board chairman Carl Eric Stålberg in a statement.
The development comes after Sparbanksstiftelserna, the Swedish savings bank foundation, was forced on Friday to give up a major stake in Swedbank because the value of the shares, which the bank foundation has used as collateral for a 1 billion kronor loan from the Folksam insurance company.
The move made Folksam Swedbank’s largest shareholder, controlling 14.6 percent of the bank’s shares, up from 9.6 percent.
Swedbank’s ownership shake up continued on Monday when the Swedish Export Credit Corporation (SEK), which had extended around 500 million kronor in credit to Sparbanksstiftelserna, announced it was also converting the loan to shares, giving the state-owned credit agency a 3.3 percent stake in Swedbank.
“The Swedish Export Credit Corporation has the intention to act responsibly and in close consultation with its owner, the Swedish state, regarding the control of the shares in Swedbank,” SEK said in a statement.
The entry of SEK comes as part of a separate agreement struck on Sunday which gave Sparbanksstiftelserna’s lenders – Folksam, SEK, and another European bank, along with four other independent savings banks – to take over 90 out of 107 million Swedbank shares.
“As Folksam Liv now takes over the shares from the holding company we are doing this primarily because we are convinced it benefits our pension recipients,”
“It is both a good investment and it promotes a long and fruitful collaboration with the bank. We are also exercising our responsibility as a long-term and stable owner of Swedbank,” said Folksam CEO Anders Sundström in a statement on Monday.
By ditching the dividend payment, Swedbank adds 0.4 percentage points to its total capital ratio, bringing it from 14.8 to 15.2 percent.
The new dividend proposal was supported by owners representing more than 45 percent of the votes and capital in Swedbank.
The bank’s long term dividend policy remains unchanged, it said in a statement.