M: companies being driven out the country

After Nordea’s threat to move its head office out of Sweden the Moderates have attacked the government. Ulf Kristersson, the party’s economic spokesperson, says, “We are driving companies out of the country with the policy the government is threatening to bring in.” He says Sweden needs more head offices, not fewer.

Nevertheless Finance Minister Magdalena Andersson is not fazed by Nordea’s threat. “If they place their head office in another country then it lowers the risk for Swedish taxpayers in the case of a crash,” she says. She points out that the banking sector is healthy, has high profits and the fees have not created any problems. She also emphasises that Nordea made billions of kronor in profits last year.

The proposal is now out for consultation.

Swedish money financing criticised project

After Donald Trump waived the requirement for the company behind the controversial oil pipeline in North Dakota to consult the indigenous population again about the environmental impact on their water, the tribe is being removed from protest camps at Standing Rock.

SvD reports several Swedish banks and fund companies, including Skandia, Swedbank and Länsförsäkringar, have invested in the company. Länsförsäkringar is trying to get the company to reroute the pipeline while Skandia’s sustainability analyst Helena Larson says Skandia is waiting for a UN special rapporteur to determine whether the rights of the indigenous population have been breached.

Meanwhile Nordea has recently stopped its fund managers from investing in the company and SEB’s fund company has sold its holdings although still has holdings via its index funds.

Probe shows flaws in Nordea

Nordea’s internal probe into the Panama scandal reveals flaws in the bank’s Luxembourg operations and adds to concerns over potential mega fines and raised capital requirements. However, Nordea’s chief executive Casper von Koskull does not foresee that this will impact on dividend payment. He tells Dagens Industri (DI) that it is part and parcel of his job to ensure that Nordea’s errors are fixed.

Nordea facing increased capital requirement

 

The Riksbank may be forced to bolster Sweden’s foreign currency reserves, the reason being that Nordea Bank AB is to merge its wholly owned subsidiaries Denmark, Finland and Norway with the parent company in Sweden. The Swedish Financial Supervisory Authority has said the mergers will not lead to an increase in the risks associated with public interest and creditors in Sweden (ed.), but Riksbank deputy governor Cecilia Skingsley is of a different opinion, and wants the bank’s capital requirement increased. “I do not understand why taxpayers should have to bear the burden,” she tells Dagens Nyheter.

Good news for Riksbank

A TNS/Prospera survey published on Wednesday showed that inflation expectations five years ahead have risen from 1.8 to 1.9%, the highest level since the third quarter of 2013. Employer expectations rose from 1.9 to 2.0% while money market expectations remained unchanged at 2.0%.

Salary increase expectations rose 0.1 points to 2.3% over one year, to 2.4% over two years and 2.3% over 5 years. Nordea has commented that this is good news for the Riksbank.

According to the Riksbank’s own survey, firms are experiencing continued low price pressure and are finding it hard to raise prices despite relatively healthy demand.

LO threatens to leave Nordea

Criticism against Nordea is growing after it was revealed that the Nordic region’s largest bank helped customers create mailbox companies in the tax haven Panama.

In Finland the three parliamentary parties decided to cease cooperation with Nordea, followed last week by the Finnish transport union, AKT, and then three days ago the industrial union, Team.

SvD reports that the Swedish Trade Union Confederation (LO) is now considering breaking off with Nordea. According to CFO at LO, Kjell Ahlberg, LO is first waiting to find out whether the bank broke any regulations.

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.

Nordea could face hefty fine

Sweden’s Financial Supervisory Authority (FSA) took immediate contact with the Luxembourg authorities after Sunday’s “Panama Papers” leak, indicating that the Nordea banking group had helped wealthy clients set up accounts in offshore tax havens.

Christer Furustedt, head of the FSA department overseeing the Swedish banks, says the allegations are serious. He notes that trust lies at the heart of banking, therefore “it is important that banks comply with the rules”.

The watchdog will meet with the bank’s senior management today to demand an answer to a number of questions.

As recently as May 2015, Nordea was fined SKr 50 million for deficiencies in its appliance of anti-money laundering rules. The bank could now face up to SKr 5-6 billion in fines, if Sunday’s allegations prove to be true.

Nordea helps clients with tax havens

Public service broadcaster SVT has gained access to the 11.5 million documents leaked from Panamanian law firm Mossack Fonseca, and found that Nordea, in cooperation with the law firm, offers some of its richest clients the means, via mailboxes in Luxembourg, to hide their wealth in tax havens.

Thorben Sander, CEO of Nordea Luxembourg has confirmed the news in part, but says that the bank changed structure in 2009 and now has few such mailboxes. According to SVT, however, Nordea still has 100 active mailboxes.

Healthy growth

Sweden’s economy grew twice as fast in the third quarter as economists had forecast, fuelled by rising consumption and investment. Exports also contributed to the growth, even if imports increased at a similar rate.
The economy expanded 0.8% in the quarter, said Statistics Sweden. At an annual rate, the economy grew by 3.9%. The Swedish krona strengthened by 5 öre against both the dollar and the euro on the news.
With the ECB expected to deliver more stimulus on Thursday, the pressure is on the Riksbank to cut the repo rate again in December. “However, the figures speak against any action by the Riksbank,” said Annika Winsth, Nordea’s chief economist.