With both Swedbank and SEB reporting their Q2 results in the space of a week, the focus has been on the need to pull back from the bad Baltic loans that are hurting the firms. However, they’ve also been cutting staff closer to home.
Both of the banks posted grim results. SEB said it was writing down SKr3bn on the value of its eastern European assets, leading to a Q2 loss of SKr193m. Swedbank, which is the largest lender to the Baltic markets, posted net losses of SKr2bn.
Both banks are looking to scale back their Baltic operations, but SEB has also been making some headcount reductions locally.
SEB has cut 922 staff since the end of last year, 464 of which were in Sweden.
One banking analyst says: “SEB employs a lot of investment bankers, which are a bigger expense because of their substantial performance-based compensation. This has been one of the concerns raised about the bank, and so it is therefore cutting back more aggressively in Sweden.”
But the bonus pool for the first half of this year is now SKr1.2bn, which is a 10% reduction on the same period in 2008. However, overall staff costs increased by 10%, driven by an increase in salaries to SKr6bn.
This suggests the bank is following the lead of some US and UK banks with a substantial government stakes and placing the emphasis on bigger base salaries rather than bonuses.
Swedbank, meanwhile, says it intends to cut 3,600 staff by 2010. However, this is going to be primarily in the Baltics and any headcount reductions in Sweden will be through natural attrition.
Phuong Pham, equity analyst – financials, at Standard & Poor’s Equity, says: “The Baltic reductions are obvious, as the macro situation there means there’s unlikely to be much demand for the products in the near to medium-term. Swedish banks covered by the government guarantee, however, are supposedly committed to lending in a bid to spur the economy so I don’t think cutting headcount is likely locally.”