Bonus-happy banks risk tougher rules: Borg

Swedish banks could be hit with even tougher restrictions on bonuses if they don’t follow new rules presented by the country’s financial system watchdog, finance minister Anders Borg warned on Tuesday.

Bonus-happy banks risk tougher rules: Borg

“The fact that they (the banks) aren’t hearing these signals which have been very clear is a provocation,” Borg told the TT news agency.

The finance minister’s comments come following reports from the Swedish Financial Supervisory Authority (Finansinspektionen – FI) that Swedish bank managers received bigger bonuses in 2009 than the previous year, despite lower profits due to the financial crisis.

Borg was also bothered by a story published in the Svenska Dagbladet (SvD) newspaper on Wednesday reporting that the amount of money set aside for bonuses in 2009 by Swedish bank SEB will likely exceed the bank’s profits.

“I’m convinced that we’re going to have a renewed debate about gradually strengthening the rules if the banks don’t get the message that the general public can’t accept this kind of behaviour, when profits depend to a great extent on public funding, ” Borg told TT.

Borg remains hopeful, however, that the new framework for bonuses laid out by FI will yield results.

According to the new regulations, bonus payments are to be based on earnings achieved over a long period of time and are to be paid out over a long period of time. In addition, a drop in profits could result in bonuses being reduced or drawn in altogether.

“It’s a very austere framework and I think that it’s fundamentally good,” he said.

At present, Borg doesn’t want to discuss alternatives for managing the bonus problem, such as the Left Party’s suggestion of a special tax on bonuses above a certain level.

“I don’t want to go into other options,” he said.

Both France and the UK have implemented a penalty on high bonuses, and the Obama administration is expected to announce banking fees later this week which could bring in up to $120 billion to cover losses incurred by the US government in its efforts to save the banking system from collapse.

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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”.