Will other Nordic banks follow Swedbank's lead?

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Swedbank has taken the unprecedented step of cancelling 2009 bonus payments in response to rising public anger over banking pay. The real question, though, is whether other Swedish banks - with significantly larger bonus pots - will follow suit.

Michael Wolf, the bank's CEO, says this shouldn't be interpreted as an overhaul of its remuneration system, but a "unique decision in light of the bank's losses and government efforts".

"There is still a strong consensus that a system combining fixed and variable remuneration is the most efficient system to create value for customers and shareholders in the long term. However, going forward we will emphasize the long-term component of the total remuneration," he said.

Up until the third quarter of 2009, Swedbank had set aside SEK406m for bonuses, and it was projected this figure could reach SEK800m by year end.

It's also important to point out that although this bonus curb applies to the majority of Swedbank's staff, those whose contracts guarantee a bonus will still receive around SEK214m.

While this is a relatively substantial figure, other Nordic banks with more extensive investment banking operations could pay a lot more. It was projected that SEB would set aside SEK2.4bn for bonuses while Nordea may pay up to SEK2bn.

In fact, when you consider that Sweden's four main banks were expected to shell out SEK5.4bn this year, taking Swedbank out of the equation seems relatively small beer.

Swedbank's bold move could inspire other Swedish banks to respond to growing public anger over bonus payouts, as well as increasing governmental pressure.

As Jan Larsson, head of group identity at Nordea, told us, the fear of losing staff meant Swedish banks were unwilling to make the first move over bonus curbs.

"We have a very mobile labour force and we have to be competitive. No bank wants to be the first to move in this field," he says.

Update on this story:

Nordea has since revealed it is to pay SEK2.8bn for its 2009 bonus pool, citing concerns about losing top talent if it scales back variable compensation.

"It is the board and management's assessment that we have gone as far as we can to limit our bonuses without compromising our business model and operations," Nordea chairman Hans Dalborg and chief executive officer Christian Clausen wrote in Swedish newspaper Dagens Nyheter.

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