Swedbank share deferral scheme sees investment banking bonuses shrink by 60%

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Swedbank's new share-related remuneration scheme has depressed bonuses sharply this year, with bankers within its corporate and institutions division suffering a 59% fall in payouts, its latest quarterly report has shown.

Variable staff costs within the division totalled SEK185m between January and September, against SEK449m during the same period last year, a fall of SEK264m.

Across the group as a whole, staff costs declined by 3% in the nine month period, to SEK7.078bn from SEK7.271bn, and by 7% between Q3 this year and the same quarter last year. The decline between Q3 and Q2 this year was 6%.

Under the bank's new variable remuneration system, between 40% to 60% of any bonus must be invested in stock and deferred for three years, meaning the share-related portion must be accrued until the time it is paid.

The programme is the first of its kind in the Swedish banking market to convert a portion of variable cash remuneration to restricted shares, said the bank.

The bank also said it had let go of 2,783 full-time employees during the past year, more than 1,700 of them going since the beginning of 2010 and the vast majority from its Russian and Ukrainian operations.

There were, however, 61 new hires within its corporate and institutions division, which was partly down to its new fixed income and currency operations in Finland launched during the third quarter, and there were another 16 recruits within asset management.

Overall, the bank reported a profit of SEK2.59bn for the third quarter, against a loss of SEK3.34bn in Q3 2009 and, for the nine-month period a profit of SEK4.7bn compared with a loss of SEK8.71bn.

The results today followed quarterly and nine-monthly figures from Handelsbanken yesterday, which reported an 11% increase in profits between Q3 2010 and the same quarter last year and a 5% increase over the nine months.

Both quarterly and nine-monthly staff costs were down 5% year-on-year, a decline the bank attributed to a combination of lower variable compensation costs, which fell to SEK173m from SEK335m, as well as lower pension costs.

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