Bonus-happy banks risk tougher rules: Borg

Swedish banks could be hit with even tougher restrictions on bonuses if they don’t follow new rules presented by the country’s financial system watchdog, finance minister Anders Borg warned on Tuesday.

Bonus-happy banks risk tougher rules: Borg

“The fact that they (the banks) aren’t hearing these signals which have been very clear is a provocation,” Borg told the TT news agency.

The finance minister’s comments come following reports from the Swedish Financial Supervisory Authority (Finansinspektionen – FI) that Swedish bank managers received bigger bonuses in 2009 than the previous year, despite lower profits due to the financial crisis.

Borg was also bothered by a story published in the Svenska Dagbladet (SvD) newspaper on Wednesday reporting that the amount of money set aside for bonuses in 2009 by Swedish bank SEB will likely exceed the bank’s profits.

“I’m convinced that we’re going to have a renewed debate about gradually strengthening the rules if the banks don’t get the message that the general public can’t accept this kind of behaviour, when profits depend to a great extent on public funding, ” Borg told TT.

Borg remains hopeful, however, that the new framework for bonuses laid out by FI will yield results.

According to the new regulations, bonus payments are to be based on earnings achieved over a long period of time and are to be paid out over a long period of time. In addition, a drop in profits could result in bonuses being reduced or drawn in altogether.

“It’s a very austere framework and I think that it’s fundamentally good,” he said.

At present, Borg doesn’t want to discuss alternatives for managing the bonus problem, such as the Left Party’s suggestion of a special tax on bonuses above a certain level.

“I don’t want to go into other options,” he said.

Both France and the UK have implemented a penalty on high bonuses, and the Obama administration is expected to announce banking fees later this week which could bring in up to $120 billion to cover losses incurred by the US government in its efforts to save the banking system from collapse.

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Deutsche Bank to pay $130m to settle US bribery probes

Deutsche Bank will pay $130 million to settle a foreign bribery probe and fraud charges in precious metals trading, US officials announced on Friday.

Deutsche Bank to pay $130m to settle US bribery probes
A woman walks past the offices of Deutsche Bank in London. Photo: Tolga Akmen / AFP
The bribery case relates to illegal payments and to false reporting of those sums on the bank's books and records between 2009 and 2016, the Department of Justice said in a press release.
The bank “knowingly and wilfully” kept false records after employees conspired with a Saudi consultant to facilitate bribe payments of over $1 million to a decision maker, the DOJ said.
In another case, the bank paid more than $3 million “without invoices” to an Abu Dhabi consultant “who lacked qualifications… other than his family relationship with the client decision maker,” the DOJ said.
In addition to criminal fines and payments of ill-gotten gains, Deutsche Bank agreed to cooperate with government investigators under a three-year deferred prosecution agreement.
In the commodities fraud case, Deutsche Bank metals traders in New York, Singapore and London between 2008 and 2013 placed fake trade orders to profit by deceiving other market participants, the DOJ said.
The agreement took into account Deutsche Bank's cooperation with the probes, DOJ said.
“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” said Acting US Attorney Seth D. DuCharme of the Eastern District of New York.
“This office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”
“We take responsibility for these past actions, which took place between 2008 and 2017,” said Deutsche Bank spokesperson Dan Hunter, adding that the company has taken “significant remedial actions” including hiring staff and upgrading technology to address the shortcomings.