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The exclusive Swedish banking club continues to shower gold to its top executives. The Finance Minister can only talk and watch but can’t do anything

Thursday, 08 March 2012
The major Swedish banks made a record combined profits in 2011 on customer mortgages mostly. Criticism on their pricing model has been fierce, especially from the Swedish Finance Minister, Anders Borg. But that is where it ends because now, bank management will be basking in millions as gold rain on them in the form of wages, high variable compensation - and the possibility of an early, substantial pension.

To start with, Nordea CEO Christian Clausen tops the four banks in terms of salary according to the banks' annual reports when a comparison is made with the other big banks.  Nordea CEO's base salary stood at around Skr10.8 million for 2011. In addition, he had Skr4.2 million in variable compensation for his efforts last year.

Günther Marder, president of Shareholders Association, expects to attend all the bank’s meetings later this spring. He notes that it is important for the voices on the distribution of bank managers' fixed payments and the pension plan be established.

There is a tendency now that increasingly, huge pays are now being passed to pension component that are much more difficult to penetrate according to him.

What also stand out this year are new, higher levels of compensation to the board members and chair persons. Not least Handelsbanken has raises in an inexplicable way their levels of that compensation. “A bank that sees itself as safe and stable do not need a risk premium element,” he notes.

All four major banks' CEOs are according to their respective contracts with their employers expected to retire at the age of 60. The commitment by the banks is that they annually set aside millions of Krona in retirement funds.

In Christian Clausen's case, it is about 1.5 million euros (Skr13.5 million) in pension contributions for 2011. It is twice as much as the bank made provision for 2010.

The difference is explained in Nordea's Annual Report and the new pension plan in which the variable component of CEO compensation is no longer counted in the pension amount. On 1 January 2011 the possible maximum retirement income was also increased from 190 to 200 base (a base amount is in the region of Skr44 000).

Christian Clausen's pension arrangements can roughly give him about Skr100 million in pensions. Even Handelsbanken's CEO Pär Boman and SEB's Annika Falkengren have a silver lining on the pension agreement. Only Handelsbanken's pension obligations to its president that would be, according to the annual report just over Skr 132 million.

SEB was yesterday the last of the four major banks to submit annual report to shareholders and the Spring Meetings arrangement. According to its CEO Annika Falkengren her salary will have to increase to Skr7 million. Her variable compensation in 2011 was just over Skr5 million.

Swedbank CEO Michael Wolf, who took over as CEO in 2009, has no variable compensation in the form of bonuses, individual or general compensation program. Wolf drew in last year Skr 8 million plus a benefit allowance of Skr157 000.

Bank executive are paid all these various allowances in the wake of massive criticism from customers and politicians. This money has been gained from particularly the bank’s high interest rate margins and the profits that the banks have made from, especially on mortgages.

Overall, the four major banks' net interest income, the difference between deposit and lending interest rates was a record Skr109 billion.
By Team

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