Tough trading conditions mean bonuses within Swedbank’s Large Corporates & Institutions division continue to be under pressure, the bank revealed today and, against the backdrop of a more expensive regulatory landscape and ongoing cost constraints, may well remain so for the foreseeable future.
Third quarter and nine-monthly figures for the Nordic bank revealed variable remuneration in LC&I down a whopping 88% in Q3 compared to the previous three months, to SEK6m from SEK50m, and down by a quarter in the nine months to September.
It was a similar picture within asset management, with variable staff costs down 54% quarter-to-quarter and off 80% compared with Q3 a year ago.
The lower allocations were a result of “weak” trading-related results in both divisions, said Swedbank, although the picture is complicated – and made slightly less gloomy – by the fact that since last year the bank has paid out significant variable remuneration in shares.
This means the amount allocated can differ quite substantially from the “recognised” amount.
For example, overall within the group, the amount of recognised variable remuneration during the first three quarters of the year was SEK348m, while the total allocated variable remuneration for the year to date was in fact SEK784m.
The picture also remains coloured by Swedbank’s decision to remove SEK54m from the LC&I bonus pool during the first quarter of the year (as announced in its quarterly results in July) for what it termed at the time, “excessive provisions for 2010 performance-related remuneration”.
More widely, president and chief executive Michael Wolf predicted challenging times ahead for European banks, with banks’ earning potential being put under pressure by declining asset prices, interest rates and economic activity.
“We have taken action by strengthening our focus on costs, an effort which will be further intensified in the months ahead. The ambition is that expenses for 2012 will be lower than for 2011,” he said, though stressing this excluded variable remuneration and its property repossessions business Ektornet.