Swedish banks warned to stop stealing from taxpayers must increase capital requirement


Tuesday, 31 May 2011
The Swedish minister of Finance has warned its banks to stop creating situations where the tax payers may be called at some point to help them out. As banks indulge in their obsessive bonus culture, banks should not make any dividends with out strengthening their capital adequacy. This was the hard words from the Swedish Finance Minister Anders Borg to reporters on Tuesday.

"They should not make any distributions until they have raised their capital adequacy, "he said, adding that banks also should exercise caution with bonuses and directors' fees before they strengthened their balance sheet.

He said that the government will tighten capital adequacy requirements and that there are good conditions for Sweden to proceed in this line faster than other countries.
The Swedish Government would therefore go up faster than other EU countries in raising the capital adequacy requirements for banks, but the EU Commission believes that the new capital requirements in the new EU Capital Adequacy Directive should be maximum rates and no minimums.


Even so, Anders Borg, believe that there are good prospects for the Swedish part to still be able to tighten the requirements on their own accord.
"We can strengthen the capital adequacy following the rules that are going on systemically through the banks or through the direct oversight over the institution. We will continue to strengthen the regulatory framework in the coming years, "he said.

Anders Borg said the government can not accept that the banks' steal money from taxpayers "for the next crisis.” "Banks drove Sweden to the edge of a volcano. We did not go into it, but it was not the banks' profits, but they took huge risks with the Swedish economy. When we consider that in this situation, there is no reason to make big dividends, raise directors' fees or pay substantial bonuses. The money should be saved in the banks and by that we’ll tighten capital adequacy, "he said.

The Minister of Finance "react" to statements from banks to make distributions and reduce capital adequacy.
"We send a clear signal. Banks will not distribute any money because they would probably be forced to make new issues in the coming years and it would of course probably be difficult for them, "said Borg speaking tough.
By Team

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