Big banks’ mortgage profits rising

The total net interest for Sweden’s big four banks amounted to around SEK 30 billion for the second quarter – an increase of over one billion kronor since last year. The profits come mainly from mortgages.

“This is a completely unreasonable figure,” says Håkan Larsson, housing economist at the Swedish Homeowners Association. Håkan Larsson says that the development is due to the low repo rate, which has meant there is a huge difference between the interest banks themselves pay and what they offer mortgage customers.

During the same period mortgages have grown in importance for banks. For Swedbank and Handelsbanken, the mortgage share of the group rocketed from 25% in 2010 to 49% and 42% respectively in 2015.

Håkan Larsson points out that the four big banks have very similar interest rates for mortgage customers, calling it a price-fixing cartel. He believes politicians ought to act and the state SBAB bank ought to lead the way by bringing down interest rates.

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.

CEO apologises for failure

On Wednesday evening Swedbank cash machines malfunctioned and customers with bankcards were able to withdraw more money than they had in their accounts. “I can only apologise for what happened, which meant that many customers yesterday (read Wednesday) could not use our bankcard products,” says CEO Birgitte Bonnesen.

The Financial Supervisory Authority (FSA) has confirmed it received notification from Swedbank but would not say more without a fuller report from the bank.

Nevertheless Birgitte Bonnesen could not hide her joy when presenting the bank’s interim report. Operating profits for the fourth quarter were SKr 5.1 billion, somewhat higher than expected, and better than the previous fourth quarter. The bank is raising its dividend to 13.2 kronor per share. Swedbank’s shares rose 0.5% yesterday.

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.

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.”

Swedbank CEO fired

Swedbank’s CEO, Mikael Wolf, is to step down with immediate effect, following a board decision. Birgitte Bonnesen has been appointed acting CEO. She will also continue as the head of the Swedish banking division. Bonnesen has been a member of the senior management team since 2014 and has worked at the bank since 1987.

Swedbank backs down

After Dagens Industri’s revelations of private property deals by senior executives at Swedbank, the bank has chosen to back down with Göran Bronner, chief finance officer, saying in an internal memo that in hindsight the bank should have acted differently and that the holding will be sold with immediate effect.
Michael Wolf, chief executive of Swedbank, has also said the bank will tighten the rules on private joint-venture investment with external investors. (DI: 8)
Teen suspect behind bank hack crime
Police have remanded into custody a 16-year-old from Växjö in connection with several suspected hack attacks against Swedbank and Nordea during the autumn. The teenager is also suspected of demanding a ransom to stop the attacks.
He is suspected of having controlled around 20,000 computers from his bedroom.
“We have a clear picture of the motive, which includes factors other than money, but we cannot comment,” said Mats Ljungqvist, state prosecutor in the case.
The maximum sentence for hacking and attempted bribery is between six and two years.

Swedbank’s poor quality envelopes

Swedbank sends sensitive, personal information concerning the estates of deceased persons in poor quality envelopes to customers via its banking operations in Lithuania. The low-cost envelopes tear easily and lack protective lining, allowing third parties to readily access classified data about bank customers’ assets.

According to one expert, Swedbank is estimated to save around 2 öre per envelope. A legal administrator, who has handled estates of deceased persons for many years, says she does not consider Swedbank’s duty of confidentiality to customers is being properly safeguarded with the use of the envelopes.

Swedbank says it has not received any complaints.