Swedish finance minister, Anders Borg gives Swedbank a stark warning


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Sunday, 28 August 2011
Instead of designing saving plans, Swedbank is to spend billions on share dividends and share repurchases. “Irresponsible,” says Swedish Finance Minister, Anders Borg, and warns the bank in strong terms.

Swedbank was really in trouble during the last financial crisis. Loan losses exploded as multi-billion losses in the Baltic threatened the bank’s existence. Twice shareholders were forced to inject money into the stock issues in order to save the bank, something in total of Skr 27 billion. In addition, the bank access to the government's guarantee program for loans to finance its operations.


Since then, among other things thereafter including rising interest rates means that Swedbank now making big money. As such the banks’ management believes that there is room to buy back outstanding shares of ten of billion of Krona.

In less than four months, Swedbank has transferred more than Skr 5billion to its shareholders, according to the Swedish daily, Svenska Dagbladet.
“I am deeply troubled when I read in today's newspaper that Swedbank is to proceed with distribution to shareholders. I would be very, very strongly desire to warn against them against that, not least for the sake of the shareholders,” said Anders Borg to radio Sweden on Saturday’s interview.

He thinks that with the threat of an emergency European banking crisis, the bank should put their plans on hold and instead try to consolidate (strengthen) its balance sheet.

“It's very important that banks are well capitalized. From my perspective, I would certainly recommend Swedbank to cancel these planned payments.”

Although central bank has urged banks to save, Swedbank's communications director Thomas Backteman, went out that the Bank shall implement a comprehensive stress test of the balance sheet under the supervision of Finansinspektionen (FI) – Swedish Financial services authority.

“We do not understand why the authorities expressed criticism of our repurchase program,” he said.
“Anders Borg has to pay for his criticism. We can only conclude that Swedbank is the second best capitalized bank even after the buyback.”

Thomas Backteman, held however, a small disclaimer:
“In a deteriorating economic outlook and increased uncertainty in the environment there is the need for a change in risk scenario and it may lead to the conclusion that we take a different decision.”
By Team

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