Nordic banks will accept G20 bonus curbs, grudgingly

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Nordic banks accept they will have little choice but to work with whatever bonus reforms are hammered out at the G20 summit next week, despite the Scandinavian banking sector having one of Europe's better records when it comes to excessive bonuses and risk taking.

As EU president, Sweden's Prime Minister Fredrik Reinfeldt is expected to be at the heart of the discussions in Pittsburgh, which will focus on compensation and bonuses plus the supervision and regulation of financial markets.

The international regulatory body the Financial Stability Board has been devising detailed rules over bonus structures, which are expected to be unveiled at the summit and could go as far as outlining what percentages of a bank's profits will be allowed to be put towards bonuses.

The priority is that new bonus structure should not end up disadvantaging any one country over another or creating one rule for state-owned banks and another for privately-run ones, argues Jan Larsson, head of group identity at Nordea.

"It has to be controllable, so that the authorities can check that the rules and regulations are being properly adhered to," he says.

While Nordic banks have not suffered from the problems that brought Wall Street and the City of London to its knees, there is an acceptance new curbs are inevitable, he stresses.

"We of course accept the democratic rule - if there are new rules we will adhere to them. We feel pretty confident that we have already created the right framework, but if new legislation comes in then we shall have to follow it," he adds.

And the bonus is likely to remain a key part of the banker's mindset for a long time to come, with Swedish banks continuing to maintain bonus pools to attract and retain high performers, agrees Johan Wingren, of recruiter Michael Page in Stockholm.

"One the one hand most people agree too much short-term gain in your bonus culture is wrong. On the other, when they move, they still naturally want as good a package as possible, they are still focused on what is the basic and what is the bonus," he says.

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