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Compensation up at Swedbank, but down at Nordea

Swedbank has risked public wrath by increasing bonuses within its First Securities broker-dealer division in the second quarter of this year, at the same time as the business unit has reported lower half-yearly profits.

Staff costs at the bank, including bonuses, rose by 2% to SEK2.423bn in the second three months of the year against Q1 and 6% compared with the same point a year ago, primarily because of “higher variable staff costs” at First Securities, the bank said.

Overall it reported operating profit of SEK2.258bn for Q2, up from SEK1.016bn in Q1 and a turnaround from the loss of SEK1.849bn reported in Q2 2009.

The picture was similar for the six months from January to June, with operating profit coming in at SEK3.274bn, against a loss of SEK5.206bn at the same point last year.

First Securities, however, reported half-yearly profit SEK28m, against SEK30m at the same point last year, with the decline blamed on lower earnings in the fixed income arena.

“In the areas of advisory services and corporate finance, activity was high, however, with a number of completed deals, primarily during the second quarter,” it added.

Among other activities, the bank revealed it had launched a programme called Young Jobs designed to help graduates and other school leavers, with 1,000 trainee positions established in the first six months of the year.

Staff numbers at the bank now totalled 17,529 against 19,277 at the same point last year, it added.

Swedbank’s results today followed those of Nordea, which published its interim and Q2 figures yesterday.

It reported record levels of new private banking customers in the first half of the year, but the fall-out from the financial meltdown and the growing turbulence in European markets meant the bank still reported a 3% decline in operating profit.

Operating profit from January to June was €1.608bn, down from €1.651bn at the same point last year. For the second quarter of the year the decline was even more marked, down 17% to €730m, from €878m in Q1 and 11% down on the €818m reported in Q2 2009.

Staff numbers were by and large static, at 33,511 versus 33,477 in 2009 and staff costs were marginally up, at €701m against €687m in both Q1 of this year and Q2 last year.

One other notable revelation was the fact payouts from its staff profit-sharing have declined markedly, with payouts of €13m in Q2, compared with €25m in the same quarter last year.

On top of this, the bank also revealed it had significantly lowered its financial provision for bonuses, setting aside €60m in Q2, or a full €30m less than the same point last year and €7m less than in Q1.

“The final decision on payout of performance-related salaries will be made based on the full-year financial outcome,” it added.

Within capital markets there was high volatility across all markets in the second quarter, largely because of the continuing worries over sovereign debt, with volatility often “as high as in the challenging periods of 2008”, he added.

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