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Baltic losses force cuts at Swedbank

Stuart Roberts · 17 Jul 2009, 10:00

Published: 17 Jul 2009 10:00 GMT+02:00

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The bank said that it would cut around 3,600 staff by the end of 2010, to adjust to tougher economic conditions.

Five hundred jobs will go in Sweden, although these will mainly come through natural retirements, Swedbank’s Group Press Manager Anna Sundblad told The Local.

“It’s too early to say whether there will be any targeted retrenchments,” she said.

It is the second quarterly loss in a row for the bank, signaling a sharp turnaround in the Swedbank’s Baltic business, with the region having been decimated by the financial crisis.

The loss compares with a profit in the same period last year of 4.6 billion kronor.

According to Reuters, analysts had expected a smaller operating loss of around 1.25 billion kronor, although Sundblad told The Local that the figure was in line with the bank’s expectations.

Loan losses, which include provisions for possible future non-payment of borrowers’ debts, were 6.67 billion kronor, compared to expected losses of around 6 billion kronor.

Story continues below…

These huge provisions once again reflect the dire economic situation in the Baltics, which has seen double-digit contractions in the economies of Latvia, Lithuania and Estonia, where the bank has major operations.

Stuart Roberts (news@thelocal.se)

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Your comments about this article

10:39 July 17, 2009 by Nemesis
Swedbank has still not restructured itself. It still has in place all the bad practices. It still pays big bonus's to failing managers who are only capable of mismanagement.

I think it is time that this was said.

A bank should be allowed to fail. It should be Swedbank. Unemployment of former bank officials would send a message to other bankers that needs to be sent. Then they would stop playing games and derailing economies.

Its entire banking should be spread evenly between other Swedish banks, with a ban on Swedbank employee's in banking.
11:03 July 17, 2009 by Keith #5083
WOW! Nemesis your comments are so disproportionately strong as to suggest that you:

1. are a dissatisfied Swedbank customer


2. an employee of one of the other banks.

Didn't Swedbank restructure - along with most Scandinavian Banks - in the early 90's ? Wasn't this whole 90's restructuring model the one used by Obama's team as the best financial model to follow through the recent financial sector crisis in the USA and the world?

Your suggestion that a prominent bank in any nation should be 'allowed to fail' ignores the international harm to confidence in a government/nation that is a result.

I actually think that Swedish banks have weathered the international financial storm - or should I say tsunami - quite well. Swedes can feel quite proud of their banking sector.

(ps. I am NOT a customer or employee of Swedbank).
11:24 July 17, 2009 by DAVID T

And what about the people who have their savings in Swedbank? What about business'? They should also be allowed to go bankrupt?
11:57 July 17, 2009 by conboy
I am a dissatisfied S E Banken customer I am told they are also facing further losses in the Baltics and the Ukraine. I presume I can await similar actions from them. Is the Swedish banking system really so safe or is the attitude that reckless banking by Swedish banks abroad is ok as long as they do not make their mistakes here in Sweden?
12:48 July 17, 2009 by BlackfDes

All the pain could have been avoided if SwedBank had applied the same lending standards that they apply in Sweden to the Baltic business.

Such was the drive for profits (perhaps read "GREED") these standards were applied very loosely if at all.

I am sure that those executives who gained from the bonuses are considering early retirement. Or at least Swedebank has put them at the top of the list for redundancy!


The Black One
07:56 July 19, 2009 by skane refugee
one way or another sadly, Swedes will have to pay for the losses incurred in the Baltic States by Swedbank and SE Banken

... either the 2 banks Swedish customers through higher charges and interest rate spreads (difference between what's charged for loans and what's paid out on deposits) ...

or all Swedish taxpayers through a state-led bailout if these are not the last of the write-offs :-(

in the short term it will be (probably mostly blameless) Swedish bank employees who pay with their jobs
09:15 July 19, 2009 by Nemesis
(Part one)

Until the brokers in banks, realise that they can't rely on taxpayers money, they more they will keep creating systemic banking problems.

An example needs to be made of a bank with consistantly bad practices like Swedbank, Allied Irish Bank or even better AIG.

In the crashes in the 70's and 90's, Swedbank changed a few rules, with some practices actually getting worse. Swedbank has not changed internally due to the crisis in its practices, contrary to the public stance from the bank.

A banks business, assets and debts are easily spread across the local banking sector. As for employee's, loss's need not be catastrophic if handled properly.
11:23 July 20, 2009 by Angst
I agree with you, Nemesis. This is a big discussion point in Britain. See http://www.guardian.co.uk/business/2009/jun/24/financial-crisis-city-banking-money



Strangely, its not even whispered about in Sweden.
11:51 July 20, 2009 by Johno
Could someone explain where the individual Sparbanks fit into the Swedbank structure. As far as I have guessed it, the local Sparbank where I have my account appears to be a stand alone unit, under the umbrella of Swedbank for services such as internet banking, cards, cash machines. What is the link in these cases. I cant see the local Sparbank being affected unless its deposits in Swedbank are at risk. Or have I misunderstood ?
19:22 July 20, 2009 by Nemesis
Part two due to posting limits.

The banking sector needs to be cleaned up, even if that means losing one bank or preferably temporarily nationalising it and firing everyone above branch manager then starting over again. When the company is sent public again, shares can be spread evenly amongst Swedish taxpayers, which would help to introduce share ownership to a wider group in society.

That would send a very strong message to banks that risking the national economy will not be tolerated and dealt with swiftly and sternly, while introducing the idea of personal investment to people on a national level.

Other business sectors can have loss's. Holding up banks as special cases, will create an even worse situation in the future. All business's need to be treated equally.

The Animal Farm economics that are presently being applied will only create more problems in future.

I am not an employee of any bank or have ever been a customer of Swedbank.
08:01 July 24, 2009 by Angst
The pure neoliberal solution is to do nothing, to let the big companies go bankrupt and watch the domino effect, as after the big companies first the smaller companies then the sub-contractors go under, opening the way for large oversees competitors to step in and buy the bankrupt companies at knockdown prices then move production overseas.

Its high time this whole issue was debated in Sweden, as in the UK and USA, but I don't see it happening.
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