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SEB executives forego pay rises after media storm

Swedish bank SEB CEO Annika Falkengren on Saturday apologized to the bank's customers and employees after the outcry that followed a decision to hike executive pay.

Published: 14 March 2009 10:44 CET
SEB executives forego pay rises after media storm

SEB executives will now forego the pay rises.

“It all went very wrong,” Falkengren said.

Swedish prime minister Fredrik Reinfeldt was among the large number of customers, staff, politicians and shareholders that were vocal in their condemnation of the decision to raise executive pay.

Annika Falkengren, it was announced, would get a basic pay rise from 7 million kronor ($811,000) to 9 million kronor per annum. As the financial crisis continues to rage this was too much for many to accept.

On Saturday morning Falkengren appeared on TV 4 to apologise.

“It feels very easy to apologize to our customers, but most of all I would like to apologize to my colleagues. We were wrong. The intentions were good but it all went very wrong.”

In response to a question as to whether the episode indicated that the bank had lost contact with reality, Falkengren replied:

“Yes. In the sense that we were unable to explain that the total remuneration actually declined.”

Falkengren was referring to the fact that SEB had elected to replace performance-related bonuses for its senior executives to meet government conditions for the banking sector support programme.

But the pay rises, basically an in-built bonus according to many critics, would have again disqualified SEB from the programme.

SEB board chairman Marcus Wallenberg initially defended the pay raises, arguing on Thursday that the bank’s top managers were actually looking at a significant drop in their overall compensation when taking the loss of bonuses into account.

“The background is that we have, for various reasons, decided to change our compensation system. We’ve removed the variable part and raised fixed salaries, but the total amount is lower,” Wallenberg told SVT.

Prime Minister Fredrik Reinfeldt was however unmoved by Wallenberg’s argument and called the move “provocative” at a time when unions and employers elsewhere are agreeing to lower pay and other measures to ensure their future.

But despite the professed apology Falkengren continued to defend the pay rises on Saturday, underlining that SEB returned its third best result ever for 2008.

“Our employees have made me understand that we have lost a lot of goodwill from our customers this week. We can now focus on working to rebuild that confidence,” Falkengren said to TV 4 adding that the financial crisis has even made her reconsider her position in the bank.

BANK

Deutsche Bank to pay $130m to settle US bribery probes

Deutsche Bank will pay $130 million to settle a foreign bribery probe and fraud charges in precious metals trading, US officials announced on Friday.

Published: 9 January 2021 15:08 CET
Deutsche Bank to pay $130m to settle US bribery probes
A woman walks past the offices of Deutsche Bank in London. Photo: Tolga Akmen / AFP
The bribery case relates to illegal payments and to false reporting of those sums on the bank's books and records between 2009 and 2016, the Department of Justice said in a press release.
   
The bank “knowingly and wilfully” kept false records after employees conspired with a Saudi consultant to facilitate bribe payments of over $1 million to a decision maker, the DOJ said.
   
In another case, the bank paid more than $3 million “without invoices” to an Abu Dhabi consultant “who lacked qualifications… other than his family relationship with the client decision maker,” the DOJ said.
   
In addition to criminal fines and payments of ill-gotten gains, Deutsche Bank agreed to cooperate with government investigators under a three-year deferred prosecution agreement.
 
   
In the commodities fraud case, Deutsche Bank metals traders in New York, Singapore and London between 2008 and 2013 placed fake trade orders to profit by deceiving other market participants, the DOJ said.
   
The agreement took into account Deutsche Bank's cooperation with the probes, DOJ said.
   
“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” said Acting US Attorney Seth D. DuCharme of the Eastern District of New York.
   
“This office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”
   
“We take responsibility for these past actions, which took place between 2008 and 2017,” said Deutsche Bank spokesperson Dan Hunter, adding that the company has taken “significant remedial actions” including hiring staff and upgrading technology to address the shortcomings.
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