Waning confidence in banks

The crisis in Swedbank and revelations of questionable tax planning by Nordea has cost the banks dearly in terms of falling confidence.

A fresh “confidence in the banks barometer” shows that the confidence index for Nordea has slipped from 52 out of 100 at the start of the year to 32 this month, and the confidence index for Swedbank has fallen from 53 to 41.

“Confidence in the banks from the general public is initially very low. This applies in particular to dimensions such as ethics, societal responsibility and transparency,” says Tony Apéria, a research fellow at Stockholm University’s Business School, behind the barometer.

FSA eyes further measures

The Financial Supervisory Authority (Finansinspektionen, FSA) is already eyeing the next step in tackling Swedish household debt after the new amortisation requirement will start to apply on 1 June.

At a meeting with the press on Wednesday director general Erik Thedéen described the Swedish mortgage borrowing as car driving too fast on a motorway, and said, “We must slow down otherwise the risks will increase. We don’t know what could spark a crisis or a decline.”

The FSA will not tighten existing legislation, but the financial watchdog is currently analysing a proposal of a loan ceiling for borrowers of 600% of disposable incomes.

Nordea lent billions to oligarch

In an Uppdrag Granskning programme to be broadcast this evening, SVT will report that Nordea loaned three billion kronor, via mailbox companies set-up in tax havens, to the Kazakh oligarch Serzhan Shumashov, who is close to Kazakhstan’s autocratic president, Nursultan Nazarbayev.

“This is as bad as it can be,” says Albin Rännar, head of market watch for the Swedish Shareholders’ Association (Aktiespararna).

Per Bolund, the minister for financial markets, says the revelations give “cause for concern”. He presumes that the Swedish Financial Supervisory Authority (FSA) will look into the allegations, as part of its investigation into Nordea following the Panama Papers leak.

Anger over EU plans against tax fraud

On Thursday the EU Tax Commissioner Pierre Moscovici presented the European Commission’s proposals to clamp down on tax fraud and corporate tax avoidance schemes, which he estimated costs the EU upwards of SKr 650 billion (70 million euros) per year.

Sweden’s Finance Minister Magdalena Andersson welcomes the proposal, while Krister Andersson, the Confederation of Swedish Enterprise’s tax policy chief, says the proposal goes too far, and warns that the proposals will entail higher tax for Swedish companies at the same time as tax revenue for the state will decrease.

“Swedish firms risk paying more since Sweden has a lower corporation tax than Germany, France and India. At the same time Swedish tax revenue will fall,” he warns.

Optimism among firms

The National Institute of Economic Research (NIER) published its economic tendency survey on Tuesday. The indicator climbed 1.6 points from 110.3 in December to 111.9 in January, with the manufacturing indicator rising sharply from 115.1 to 120.8.

Swedish firms continue to be confident about the economy. Consumers are more pessimistic than usual about the economy, but are more upbeat about their personal finances.

According to Nordea, the economic tendency indicator is at its highest in over five years, and on a par with a 6% rate of growth in the economy. However, Mats Dillon, head of NIER, says the strong manufacturing indicator, which pulled up the overall indicator, should be taken with a “pinch of salt”.

New probe into Gripen deal

Brazilian prosecutors have launched a new probe into suspected payment of bribes concerning Brazil’s purchase of 36 JAS Gripen planes from Saab.

According to the Brazilian paper O Estado de Sao Paolo, the probe is part of a bigger investigation into the suspected illegal payment of around SKr 5.2 million by the jailed lobbyist Mauro Marcondes Machado to a company owned by the son of former Brazilian President Lula da Silva. The paper writes ”documents found at the home of the lobbyist state that Saab asked Lula to endorse support for the Saab deal with President Dilma Rousseff”.

Swedish companies digitally weak

A study carried out by Fujitsu, and presented at Davos, shows that Swedish companies are lagging behind in terms of digitalisation. The report shows 52 percent of the 153 Swedish decision-makers who took part in the study consider the digital strategy in their company to be unclear and confusing. “We have infrastructure and networks that make it possible to work digitally but we do not have the knowledge to benefit from the technology,” says Karin Scheil Jonsson, MD of Fujitsu Sweden.

One explanation could be that there has been less demand from consumers in Sweden, compared to, for example, Germany. Another reason is uncertainty about who has control over digital projects.

Jacob Wallenberg, chair of Investor, says, “It is clear that we, on the board, must spend more time working on this than we have done previously.”

Riksbank should have new inflation target

Professor Marvin Goodfriend from Carnegie Mellon University and Mervyn King, former government of the Bank of England, who reviewed the Riksbank’s performance 2010-2014, have suggested the Swedish central bank ought to be able to take longer than two years to reach the inflation target of 2 percent, as long as they give sufficient reason.

Mervyn King says that confidence is built on honesty, “There is no point pretending that the world has not changed. The Riksbank ought to be able to say ‘Right now we cannot achieve the target within two years without destabilising the economy’”.

They criticised the bank for overly optimistic forecasts, as well as for a mechanical trust that monetary policy and fine-tuning of interest rates would achieve inflation targets.

Poland’s policies concern Skanska

Skanska employs 7,750 people in Poland, with sales in the country accounting for 7 percent of the builder’s total turnover.

Executive vice president Roman Wieczorek is now concerned about political developments, since national-conservative party Law and Justice came to power in 2015. Measures such as appointing its own members to the Constitutional Court and new legislation allowing the government to appoint and dismiss key public service roles have put Poland on a collision course with the EU and the European Commission has launched an inquiry.

“Many of the changes are leading to greater polarisation in society, which is not good. It could create instability in the future,” says Roman Wieczorek. He thinks there is a risk that economic support from the EU may be reduced.