Borg bashes Swedish banks’ booming profits

Sweden’s Finance Minister Anders Borg wants to put the squeeze on Swedish banks, where profits have swelled, shareholder dividends ballooned, and interest margins on mortgages doubled.

Borg bashes Swedish banks' booming profits

The four major Swedish banks, Nordea, Handelsbanken, SEB and Swedbank, earned a combined 68 billion kronor ($10.8 billion) last year, an increase of 32 billion kronor ($5 billion) from the year before, the Expressen newspaper reported on Wednesday.

At the same time, the Riksbank reported the difference between the repo and mortgage rates have doubled, prompting Borg to take issue with how banks pad their profits.

“Banks always drive up their margins and are very keen to make big profits. It is a bit of a sheltered operation in terms of profitability. It requires no great expertise when it comes to earning profits when you pass along the bill to mortgage holders,” Borg told the newspaper.

Borg argued for stronger laws to prevent banks from continually raising dividends, stating that profits should not be distributed to the owners but rather used to “enhance the stability of the Swedish economy”.

The finance minister, who disagrees with opposition political parties that want to retain the state’s ownership of SBAB, promised to teach the state-owned mortgage lender a lesson, calling it a “problematic” company for the state to own.

SBAB management abolished top-up mortgages with mandatory amortisation payments, continues to ignore the government’s mortgage ceiling, and gives extra discounts on larger loans, Borg charged.

He also believes that the nation’s capital reserves need more padding, stating that Sweden’s economy looks healthy in the short term but may not be able to survive another economic crisis or housing bubble.

“We live in a brutal world, and Sweden will not be in a position to expose itself to such high vulnerability as a year ago,” he told Expressen.

The 43-year-old finance minister has previously noted that the risks for the Swedish economy were considerably higher during the crisis in the Baltics than known.

Swedish housing prices are another concern where there is reason to worry, according to Borg.

“There is a risk here. There is no doubt. However, it is not just about housing prices, but also about total household debt,” he said.

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Nordea’s Danish offices raided in money laundering probe

The Nordic region's largest bank Nordea said Monday that Danish prosecutors had raided its offices in Denmark as part of an investigation into money laundering.

Nordea's Danish offices raided in money laundering probe
File photo: Mads Claus Rasmussen / Ritzau Scanpix

The Danish State Prosecutor for Serious Economic and International Crime seized physical and digital material — including emails — from the Copenhagen offices on June 12th, reported the Danish business newspaper Børsen, which first broke the story.

The bank confirmed the raid in a statement to AFP, saying it was carried out in relation to a probe into “compliance with anti-money laundering procedures” at its international branch, which was responsible for non-Nordic customers.

“We are fully cooperating with the prosecution service to ensure that they have access to all relevant information,” said Nordea's Danish head Frank Vang-Jensen.

The bank said that in 2014, when it was refocusing its activities on Nordic countries — and away from Baltic states — it evaluated its customers at the international branch and “exited the customers who didn't meet our criteria”.

The Danish Financial Supervisory Authority then lodged a money-laundering complaint against Nordea in 2016.

In October last year, Sweden's financial crime unit also received a complaint against Nordea, which moved its Swedish headquarters to Finland later that month for tax reasons.

Nordea has set aside 95 million euros to cover potential first-quarter costs related to the money laundering probes.

The investigation comes as Denmark's largest lender Danske Bank is the target of criminal probes in several countries over some 200 billion euros in transfers that passed through its Estonian branch between 2007 and 2015, involving some 15,000 foreign clients.

READ ALSO: Nordea reported to Denmark investigators over money laundering