Editions:  Austria · Denmark · France · Germany · Italy · Norway · Spain · Sweden · Switzerland
Advertisement

Swedish finance firms skirt bonus rules: report

Share this article

Swedish finance firms skirt bonus rules: report
12:34 CET+01:00
Roughly half of Sweden's financial firms have failed to abide by rules for handing out performance-based bonuses, a new report has shown.

According to findings released on Monday by the Swedish Financial Supervisory Authority (Finansinspektionen – FI), bonus systems at Swedish banks and investment firms have problems in how they are constructed and accounted for and how money is paid out.

"This is a remarkably bad result. It shows the need for a change in attitude in the industry. We're now going to proceed and carry out more in-depth investigations on these companies," said FI head Martin Andersson at a press conference.

Following the in-depth investigations, companies found to not follow the rules governing bonuses will be punished.

"If it's the case that they don't convincing explanations, we will proceed as usual and that can end with us intervening in the companies' operations," said FI lawyer Per Håkansson.

However, for the moment, FI has not yet revealed the names of the companies who have failed to follow the rules.

"For now, all such matters remain confidential," said Andersson.

In the report, the agency found that in many cases the companies' actions stem from a lack of understanding of current regulations.

But some of the companies are thought to have made a concerted effort to ignore the rules.

"In some cases, the deficiencies are so remarkable that it gives FI the impression that the company consciously went around the rules," the agency said in a statement.

Sweden's Financial Markets Minister Peter Norman welcomed the agency's report, encouraging FI to keep pressure on finance firms that don't abide by current regulations.

"The actors in the finance industry don't follow the regulations is a provocation and reduces trust in an industry which has been recently been deeply involved in the developments which led to crisis, unemployment, and a drop in production. It's good that FI has followed up on the implementation of the new, tougher rules and sees to it that they are followed," he said in a statement.

"FI should take additional measures if necessary to ensure that bonuses in the finance industry don't become haven for greed and increased risk taking."

The agency's report encompasses 41 banks, credit institutions, investment funds and fund management companies and was carried out during November 2010.

The tougher regulations, which came into effect on January 1st, 2010, are based on recommendations from the European Commission and are meant to ensure that companies' remuneration policies are consistent with good risk management and don't encourage short-term profits and excessive risk-taking.

Among other things, the rules stipulate at least 60 percent of an employee's bonus should be deferred for at least three years if that person's actions had a material impact on the risk exposure of the firm.

The firm can also decide that deferred bonuses be cancelled altogether under certain circumstances, such as if the firm's position is significantly weakened.

Get notified about breaking news on The Local

Share this article

Advertisement
Advertisement
Advertisement
Jobs
Click here to start your job search
Advertisement
Advertisement

Popular articles

Advertisement
Advertisement