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Pay is sliding with the large Nordic banks

It’s never nice to put a dampener on holiday plans but the underlying message to bankers from the latest quarterly and half-year figures from the main Nordic banks is: don’t be too extravagant with your vacation spending.

Of course, none of the big banks have said this specifically, but the clear theme from SEB, Nordea and Swedbank’s results this week and last is that variable pay and bonuses are likely to remain subdued for the foreseeable future.

The picture appears to be particularly grim at Swedbank which in Q2 and half-yearly figures published today, revealed it had slashed variable staff costs within its Large Corporates & Institutions divisions by 57% compared to Q2 last year, with just SEK50m being accrued in Q2, against SEK116m at the same point last year, and a 40% drop quarter to quarter.

A large chunk of this reduction was the removal of SEK54m from the bonus pool during the first quarter to adjust for “excessive provisions for 2010 performance-related remuneration within LC&I”, the bank added.

Operationally, while the overall outlook in investment banking remained “cautious” there were some brighter spots, however.

The addition of fixed income and currency operations in Helsinki was producing “positive results”, while corporate finance activity in Norway was looking strong.

The bank was also working to develop its brokerage operations in New York, it added.

At Nordea, meanwhile, which reported on Tuesday, staff costs were down 3% quarter to quarter, though up 6% year-on-year.

In terms of performance-related salaries, allocations had again slumped, with provision in Q2 of €45m, compared with €75m in the previous quarter, the bank added.

Chief executive Christian Clausen warned the longer term outlook for bonuses remained straitened.

“We will continue to improve capital efficiency and implement plans to contain cost growth in the later part of 2011, and thereafter keep costs largely unchanged for a prolonged period of time,” he said.

Even, at SEB, which reported last week and has often bucked the trend when it comes to variable remuneration, the picture appears muted.

The downturn in global equity markets as well as customers’ reallocating portfolios had negatively affected the wealth management and life insurance businesses, it said.

Within merchant banking staff costs were down 6% quarter to quarter and 7% year-on-year.

Within wealth management, too, staff costs fell 1% quarter to quarter, but were up 8% year-on-year.

More positively, however, the bank has at least been hiring, with investment in its Nordic and German operations increasing staff numbers by 335 to 17,351 over the past year, it said.

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