Dispute over Nordea’s head office

Both parties could end up losing in the dispute over Nordea’s head office, according to several commentators. Nordea has threatened to move its headquarters out of Sweden as a result of the political decision to raise the fees for the resolution reserve (to aid banks in the case of a financial crisis – ed.).

However, although the government has so far focused on the positive elements of a Nordea move for taxpayers, an anonymous source to SvD points out, “It would make big international news. It could lead to a discussion about the business climate in Sweden, something the government does not want.” On the other hand Nordea risks disappointing customers, as the move could be perceived as a rejection of the bank’s largest market.

Meanwhile, writing in Dagens Industri today, MEP Gunnar Hökmark accuses the government of undermining Sweden’s competitiveness with the new bank tax and says that it is incomprehensible that Finance Minister Magdalena Andersson want to bring in this tax, which is making Nordea, the Nordic countries’ largest bank consider moving.

Pressure at H&M’s AGM

Clothing giant H&M’s AGM on Wednesday was the ninth under Karl-Johan Persson as CEO. He is now one of the longest serving CEOs on the OMXS30. However investors with shares in H&M during his steerage have made a bad deal. The shares have had an annual total return of under seven per cent, which is eleven percentage points lower than the annual return of the Stockholm stock market total return index, SIX Return.

To boost confidence institutional owners want DI to report more information about the progress of the company’s concept brands (see SPR 10/5 Early Ed.). Neither chair Stefan Persson or CEO Karl-Johan Persson gave interviews at the AGM, but Karl-Johan Persson said, “We listen to good ideas, take them in and discuss whether we can do better. It is always a balancing act. We think that it is most important for the shareholders that we have lots of focus on the customers and the business. We have annual and biannual press conference when I meet investors and analysts.”

Three lost years for welfare

In Dagens Industri today, in response to the government’s presentation of the Reepalu welfare inquiry yesterday, Håkan Tenelius, from the Association of Private Care Providers (Vårdföretagarna), writes, “Many thought that a solid inquiry would be able to present proposals that secured quality as well as freedom of choice and diversity. However instead it brought macabre, theoretical calculation models which no minister with self esteem can present to parliament.”

He writes, in the reference group, “it was clear… that the inquiry has not had any ambition to constructively contribute to the development of quality in welfare” and is doubtful of the quality measurements currently used. “The Reepalu inquiry’s answer is three lost years for welfare.”

He urges the alliance to take the initiative and the majority in the Riksdag must do what it can to bring about a process for authorisation for all welfare providers.

Growth in danger zone

After several years of dramatic price rises, Sweden is now one of the countries at risk of a collapse in house prices, resulting in GDP growth slowing down.

House prices have risen, in real terms, by over 30% in Sweden and New Zealand in the past three years, accompanied by rising household debt. Now, according to credit rating institute, Moody’s, the two countries are most exposed to falling house prices.

Jens Magnusson, from SEB, says the warnings are correct but that the conclusions can be qualified. He points out that price increases in Sweden do not mainly come from speculation and that lending is distributed so that those with the highest incomes borrow the most.

Moody’s report also points out that Sweden’s social safety net provides a cushion for households but means greater economic exposure if things begin to get shaky.

Riksbank critical of bank fees

In its response to the government’s proposal to raise bank fees for the resolution reserve (which could be used in the event of a financial crisis – ed.), the Riksbank has said that it is uncertain whether the increase in the fee would really boost resources for handling a crisis. The Swedish reserve does not consist of an actual fund and there are no liquid assets earmarked for bank crisis management, the central bank points out. The bank believes the government ought to consider whether there are better alternatives for strengthening financial stability.

Finance Minister Magdalena Andersson does not want to comment on the responses until they are analysed.

Green light for Gazprom

Russian Gazprom says it now has the go-ahead to build the controversial gas pipeline Nord Stream 2.

Anna Kaisa Itkonen, the European Commission’s spokesperson on energy, says, “We do not like Nord Stream 2 from a political aspect. However, saying that, there are no legal grounds on which the Commission can oppose it.”

A new route to Europe has long been the goal of the Russian state gas company, something that has met widespread opposition. A new pipeline will enable Russia to bypass Ukraine and Eastern Europe, increasing its control over the countries. Martin Kragh, from the Swedish Institute for International Affairs, points out that Russia wants to cut Ukraine out of the European energy equation and tie up Europe as a long-term export market.

Nonetheless, Chloé Le Coq, doctoral student at Stockholm School of Economics, says there are positive factors, for example the opportunity to diversify transport routes for gas to Europe.

All cleared in Saab case

The verdict of Vänersborg district court was a success for all seven accused in the Saab trial into financial crimes. All, including chair of the board of Saab Victor Muller and CEO Jan Åke Jonsson, were acquitted of all charges.

Lawyer defending head lawyer Kristina Geers, Per E Samuelsson, says that the verdict is not a surprise and he is strongly critical of the process. “It is not rational to spend so much time and resources on something that interferes so much with so many individuals when there is no crime,” he says and assesses that it cost taxpayers over 10 million kronor.

Head prosecutor Olof Sahlgren says that he did not expect this outcome.

Bank proposal “a rush job”

Professor Ulf Berritz, whose field of expertise is European law, has studied the government’s proposal to raise bank resolution fund fees, that is to say the reserve to shield Sweden from the next financial crisis. At a seminar organised by the Swedish Bank Association (Bankföreningen) on Wednesday, Professor Berritz concluded that the proposal is incompatible with EU law. He also criticised the memorandum sent out by the Ministry of Finance, which failed to analyse the impact of the proposed raise in industry payments, describing it as “a rush job” with insufficient preparation.

Persson defends H&M’s business model

Weak sales in March and swelling stocks took the edge off a result that for H&M was surprisingly positive. One of the pieces of news in H&M’s quarterly report was that the company is adding another concept to its portfolio when it opens the first store under the brand Arket in London, along with online stores in 18 European countries.

CEO Karl-Johan Persson explains that when something new is developed, as with COS and & Other Stories, there are initial high costs but, for example, COS now has a turnover of over 10 billion kronor. “The prices in Arket are around the same level as COS and Stories, with a major focus on quality. We have a great team here in Stockholm and have worked on this for a year and a half. It is not like any of our other concepts,” says Persson.

H&M has had a tough start to the year, 4% growth in local currency during the first quarter and 7% in March. However Persson says the company is still aiming for its goal of 10-15% growth per year. He says it has become more difficult but the operating margins could still increase. Addressing online issues, Karl-Johan Persson says, “I think that it is a misunderstanding that we are falling behind online… The model is working, even if we could develop it further.”

Andersson: “Jobs and growth at risk”

There are no winners in the UK’s exit from the EU, according to Finance Minister Magdalena Andersson who wants British guarantees before negotiations can begin on a trade deal.

She also warns for emotional turmoil during the negotiations. “There will need to be adults in the room,” she says pointing out that both jobs and growth are at risk. The UK wants to negotiate a free trade deal alongside the exit negotiations but Magdalena Andersson is sceptical about how realistic this is.

“It is important that the UK meets its financial obligations towards the rest of the EU,” says Andersson, as the UK has obligations of between 50 and 60 billion euro to the EU (between 475 and 570 billion kronor).

The National Board of Trade in Sweden (Kommerskollegium) has calculated that Swedish companies are going to have to pay 2.1 billion kronor in duties when the Brits leave the EU if no new trade deal is in place.