Political Economy
Swedens biggest banks are
Swedish Finance Minister starts feeling bad as banks begin to report increased profits
Tuesday, 07 February 2012
How can the repo rate remain this low, but banks' mortgage rates remain
soo high? The Swedish Finance Minister, Anders Borg ponders, as Swedish
big banks start reporting astronomical profits and increase dividend
payments while households are squeezed in the middle with runaway
mortgage rate charges.
He has vocally called such phenomenon provocative in that the major
Swedish banks keep up their profits by charging high interest margins
on household mortgages.
As SEB on Tuesday reported a profit of Skr3.1 billion for the fourth
quarter of 2011, including the margins on lending which showed a
decrease, the minister has now criticized the big banks for keeping up
their profitability on household expense.
For him the big banks are trying to abuse their dominate position in
the market by manipulating and holding household to ransom by forcing
them to pay higher interests on their mortgages.
It is like a cartel because all the big banks behave the same and for household, there is no way to hide or to run to.
In December, the Swedish repo rate was cut further, but the Swedish big
banks instead have seen this as a gift to them and have not joined in
lowering their mortgage rates.
In an interview with Swedish newspaper, Svenska Dagbladet, Mr Borg
pointed out that, there is evidence to suggest that Swedbank, SEB,
Handelsbanken and Nordea have the highest interest rate margins in
Europe in terms of the mortgage charges.
“I think it is provocative that they maintain their profitability by
having very wide interest rate margins on households in a situation
where the economy would thrive if the margins were to decline. It is
important that we put pressure on banks,” says Anders Borg, to Svenska
Dagbladet.
Anders Borg said that the major banks make high profits because there
are few other options for customers, and that you have read the state -
aid systems. The Minister of Finance is reported to be in favour of new
taxes for banks and the financial sector, such as a tax on financial
transactions.
“It is partly this that makes us in the long run probably to have to
have a discussion about how we should view the treasures of the banking
sector,” Anders Borg told Svenska Dagbladet.
By Scancomark.se Team
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