Wednesday, June 22, 2016

Crisis meeting on the FI after SvD’s Nordea revealing – Swedish Dagbladet

“it is clear that managers do not dare to be tough on banks, especially when it comes to issues of equity. the employees are not allowed to do its job,” said a source at the FI to SvD. Photo: Tomas Oneborg

SvD Näringsliv sources talking about a culture on the Financial Supervisory Authority has been afraid to challenge banks on certain issues.

on Tuesday FI also did his best to downplay the significance of the memorandum SvD Business could reveal on Monday. It shows that Nordea systematically used far too optimistic forecasts for its future credit losses. The consequence is that the bank has 50 to 80 billion for some of the capital, according to the memorandum.

The FSA called staff to the emergency meeting after SvD Business article. And internally outrage big around that management decided to outwardly downplay the problem. Sources confirmed to SvD Business, the picture that emerges in the memorandum.

– 50-80 billion is perhaps a good wide range, the perception is now a need for 65-75 billion. There is a strong criticism of the FI acted on this issue, a source said.

Officially FI’s line is completely different. In a press release on Tuesday said the inspection that the future need for capital in Nordea will be “significantly lower” than the 50 to 80 billion mentioned in the memorandum.

The problems will according to SvD Business sources have existed for several years.

When the problem was discovered, warned the heads of the department of FI involved in reviewing banks’ calculations. According to SvD Näringsliv sources no action was taken. The then head of the department ended the FI in 2015 and was a senior manager post at the right Nordea.

manager since February in the year employee at Nordea responsibility for the same type of models that person was responsible for reviewing the FI. According to SvD Näringsliv sources created passivity from FI’s great dissatisfaction internally.

– It is clear that managers do not dare to be tough on banks, especially when it comes to issues of equity. The employees are not allowed to do its job, says another informant.

To many executives and other employees are often recruited from access to jobs at the banks that they should review, described as a major problem, according to sources. The ability to get a well-paid job at a large bank makes some reluctant to go too hard up in their assessments.

The memorandum SvD Business revealed yesterday was written in March year. Several senior managers of the FI should also have been informed orally of the contents, according to a third source. Despite the alarming message chose FI’s management decided not to do anything.

– The standard had been to give Nordea a week to come up with a good explanation. And then go out and inform the market if it detected a serious error, a source said.

the content of the memo will according to SvD Näringsliv sources must be known by a large number of people on FI.

When the FI’s Director General Erik Thedéen on Monday commented SvD’s data, he wanted neither confirm nor deny the contents of the secret memo but said:

– All deficiencies that we discover on this serious but I have not seen more failures than we announced yet.

This therefore despite to senior managers on FI then already should have known about the content.

– the management has painted himself into a corner by saying that this is not so serious, says a source.

According to several sources, there is an internal conflict between the departments are working to examine the banks and who wants to see tougher and management who want to go softer on.

that there are problems with Nordea estimates of their risk is nothing new in the FI. Last year came FI found that those who worked to calculate risks in Nordea were not sufficiently independent. Bank affärsdel had had too much influence at the expense of risk and control functions at the bank. to ensure compliance.

In a letter of May in the year writes FI including: “Inter method also involves incentives for the banks to reduce their risk weights, and thus their capital requirements, beyond what is justified by banks’ actual risk level “.

A bank that consistently underestimate their risks need to hold much less capital in buffer. Thus, the bank can also hand out more money to its shareholders, an issue that has become crucial for the banks’ shares are valued on the stock market. Banks have also invested large amounts of departments to calculate the risks.

The implication is that the risks in recent years is estimated to have fallen significantly.


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