SEB executives forego pay rises after media storm

Swedish bank SEB CEO Annika Falkengren on Saturday apologized to the bank's customers and employees after the outcry that followed a decision to hike executive pay.

SEB executives forego pay rises after media storm

SEB executives will now forego the pay rises.

“It all went very wrong,” Falkengren said.

Swedish prime minister Fredrik Reinfeldt was among the large number of customers, staff, politicians and shareholders that were vocal in their condemnation of the decision to raise executive pay.

Annika Falkengren, it was announced, would get a basic pay rise from 7 million kronor ($811,000) to 9 million kronor per annum. As the financial crisis continues to rage this was too much for many to accept.

On Saturday morning Falkengren appeared on TV 4 to apologise.

“It feels very easy to apologize to our customers, but most of all I would like to apologize to my colleagues. We were wrong. The intentions were good but it all went very wrong.”

In response to a question as to whether the episode indicated that the bank had lost contact with reality, Falkengren replied:

“Yes. In the sense that we were unable to explain that the total remuneration actually declined.”

Falkengren was referring to the fact that SEB had elected to replace performance-related bonuses for its senior executives to meet government conditions for the banking sector support programme.

But the pay rises, basically an in-built bonus according to many critics, would have again disqualified SEB from the programme.

SEB board chairman Marcus Wallenberg initially defended the pay raises, arguing on Thursday that the bank’s top managers were actually looking at a significant drop in their overall compensation when taking the loss of bonuses into account.

“The background is that we have, for various reasons, decided to change our compensation system. We’ve removed the variable part and raised fixed salaries, but the total amount is lower,” Wallenberg told SVT.

Prime Minister Fredrik Reinfeldt was however unmoved by Wallenberg’s argument and called the move “provocative” at a time when unions and employers elsewhere are agreeing to lower pay and other measures to ensure their future.

But despite the professed apology Falkengren continued to defend the pay rises on Saturday, underlining that SEB returned its third best result ever for 2008.

“Our employees have made me understand that we have lost a lot of goodwill from our customers this week. We can now focus on working to rebuild that confidence,” Falkengren said to TV 4 adding that the financial crisis has even made her reconsider her position in the bank.


Police to investigate Nordea bank over money laundering

Danish police will investigate the Swedish bank Nordea after a year-long probe by regulators into money laundering led to "criticism" of its procedures, the bank said Friday.

Police to investigate Nordea bank over money laundering
Photo: Marcus Ericsson / TT

Detectives will examine how money laundering rules were followed at the bank's Danish subsidiary and could result in “sanctions”, Nordea said in a statement.

“We realize that we initially underestimated the complexity and the time it takes to change our procedures,” said Nordea chief executive Casper von Koskull.

The bank added that 850 Nordea employees are currently involved in the fight against money laundering which the bank plans to increase to 1,150 by the end of the year.

In May 2015 the bank was fined 50 million kronor (€5.4 million euros) – the maximum possible – by Swedish regulators who accused Nordea of “not following money laundering rules for several years” and failing to “evaluate the risks of (doing business with) certain clients”.