Owner uprising brings down Sundström

On Tuesday morning nine major owners of Swedbank were summoned to a meeting by the nomination committee to try and unite the ownership on the issue of Anders Sundström remaining as chairman in view of the AGM next week. However the meeting ended in an uprising as several institutions declared that they did not intend to support the re-election of Anders Sundström. To avoid a chaotic AGM the committee were forced to call Sundström and inform him that he had been fired.

According to information DI has, it is the handling of CEO Michael Wolf’s resignation and private property deals involving several directors, which is behind the action.

Anders Sundström says, “I ought to have started the process of recruiting a new CEO earlier. The other thing is that we ought to have understood earlier what Dagens Industri highlighted in these property deals.”

Government sets date for closure

During election campaigns the Green Party set the goal of closing at least two nuclear power reactors during the mandate period. So far the closure of four of Sweden’s ten reactors has been announced. At the weekend the government announced the remaining six reactors will be phased out within 20 years. Lise Nordin, Green Party spokesperson on energy, considers the decision a major success.

However the alliance parties are critical. “They say they want to use the alliance’s energy agreement, but that is not true. It says nothing about phasing out nuclear power within 20 years as the government now wants, which is bad for both the environment and industry’s competitiveness,” says Maria Weimer, the Liberals energy spokesperson.

Multi-million kronor hit threatens Vattenfall

In the past three years state company Vattenfall has declared total losses of SKr 52 billion, mainly due to write-downs in the value of power plants, which have dramatically lost value owing to falling electricity prices.

A sensitivity analysis carried out by Vattenfall shows the threat of new write-downs is not over. Even slight falls in the price of electricity could trigger significant hits to the results. A future fall of 5% in the price of electricity with no change to the cost of fuel and emission rights would lead to a reduction in the value of fossil-based assets in Germany and the Netherlands of between 15 and 27%, the analysis shows.

Baylan promises tax decision at latest in May

A report on the economic situation in the energy sector was brought before the energy commission yesterday. Declining profitability risks closing Swedish nuclear power, which represents 40% of the country’s energy, early, according to the industry. And industry organisation Swedenergy (Svensk energi) claims output tax makes up a quarter of all production costs.

Minister for Energy, Ibrahim Baylan (S), commented that all electricity production is struggling with low prices, and that taxes must be examined. Nuclear providers are facing major investment decisions, which must be taken before the middle of the year to meet tighter safety requirements after the Fukushima accident in Japan. Baylan has now promised the decision about output tax will be made by the middle of May.

Banks not pleased with FI decision

Yesterday the Swedish Financial Supervisory Authority (Finansinspektionen, FI) decided to raise the lending buffer for banks to 2 percent from 19 March 2017. Chief economist from FI, Henrik Braconier, says the increase is because the authority sees lending growth continuing strongly in the Swedish economy, which means increased risks linked to the banking system.

  However the banks are unhappy. Hans Lindberg, CEO for the Swedish BankersAssociation (Bankföreningen) does not consider strong lending growth a problem. The decision is unfortunate. Further capital requirements make it more expensive to lend money, which hold back growth and the creation of jobs in the Swedish economy,says Lindberg.

Government turnaround

Shortly after the criticised rise in taxes on biofuels the government is backing down and recommending a reduction. Finance Minister Magdalena Andersson says, “We want there to be good conditions for biofuels and propose that taxes are lowered as much and as quickly as possible.”

  However as recently as December taxes were raised on several biofuels. In combination with falling petrol and diesel prices, sales of E85 and RME have fallen. Back then Magdalena Andersson said the government did not want to raise taxes because of EU regulations, something the Centre Party has pointed out was incorrect.

  In response to why the taxes can be raised now, Magdalena Andersson says, “Biofuels may not be overcompensated in relation to the fossil fuels they replace. And the Swedish Energy Agency’s (Energimyndigheten) new report shows there are good margins for overcompensation.”

State risk capital change

Writing in DI debate on Saturday, Innovation Minister Mikael Damberg (S), writes that the government is presenting its proposition for a new structure for state risk capital and state company financing. The government suggests launching a national development company, Fondinvest AB, which will be the hub for future state risk capital.

  The government will also take the initiative in establishing a demonstration fund for developing renewable fuels, bio-based materials, networked products or to test new technology. Sweden’s future export successes need to be tested under real conditions before they can be launched on the market.

  The proposition is intended to strengthen the ability for Swedish companies to create, grow and export with a base in Sweden.

Investments down in 2016

Investments in industry grew last year by 10% to SKr 66 billion, but this year will be down by five percent, according to a survey by Statistics Sweden.

However it looks brighter for construction, with planned volume increases of 17% and for trade in goods, at 12%.

Nevertheless the outlook remains bleak for mining as the fall in investments continues this year, minus 23%, according to the companies’ plans.

Construction companies issue warning

The gap to achieve the construction target is much bigger in reality than what has been highlighted in the debate, according to Lennart Weiss, commercial director of the construction company Veidekke.

According to (Boverket) 700,000 properties are needed by 2025. Last week Prime Minister Stefan Löfven said that the forecast of construction per year is 53,000 houses leaving only 17,000 until 70,000 are built per year.

However Weiss says the government is focusing on properties in which construction has been started, not finished. “The forecast for 2016 is around 40,000 houses and that is when capacity in the construction industry is at top… Furthermore construction is expected to go down again next year,” says Lennart Weiss.

Raised capital requirements for banks

Yesterday the Swedish Financial Supervisory Authority (Finansinspektionen) suggested further tightening of the requirements on banks’ lending to corporates, putting more pressure on the banking sector.

The new rules entail raising the risk weight for corporate lending, which will mean that the average risk weight is expected to exceed 30%. The risk weight determines how much capital the bank must have as a buffer for each krona loaned.

The news hit Handelsbanken in particular, whose shares closed at a minus.