Response to interpellation 2023/24:659 on measures against banks' excess profits
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
M argues that state-owned companies should be managed for long-term value creation and that non-market-based return targets distort competition. M emphasizes that the government counters inflation through budgets and reforms that strengthened the job tax credit and lowered taxes on fuels 1. M argues that a bank tax would make loans more expensive for average households 2 and that the state should not direct the companies' operations 2. M wants to improve competition through changed interest rate differential compensation 1 and believes that banks should use their profits better, for example to stop fraud. 3 S argues that the banks have earned a lot from high interest rates and proposes a temporary bank tax 3. 3 S suggests that SBAB should offer salary accounts to increase competition 3. 4 S considers the government to be passive and that the bank tax could finance healthcare and combat gang crime 4.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Mikael Damberg has asked me how I and the government intend to utilize state SBAB to strengthen consumers' position in the tough economic situation that currently prevails. He has further asked me what measures I and the government intend to take otherwise to facilitate things for those households that are struggling with increased costs and higher interest rates.
The Government has the mandate from the Riksdag to actively manage companies with state ownership so that the long-term value development becomes the best possible. SBAB Bank AB (publ) is a company exposed to competition operating in a deregulated market. Setting return targets that are not market-based for such a company is not compatible with the long-term value creation that is the Riksdag's overall goal with the management of the company. If SBAB were given a non-market-based return target, it would also distort competition and mean that the capital of the ultimate owners, the taxpayers, is not well managed.
It is the company's board and management who - according to the Companies Act - are responsible for the company's organization and the management of its affairs as well as the ongoing management of the company's operational activities, which includes which services the bank offers its customers.
Counteracting high inflation is the core of the government's fiscal policy and is reflected in the fact that the government has presented two restrained budgets.
For the government, it has simultaneously been important to support households, companies, and welfare that have had it tough during the crisis. In the budget bill for 2024, several reforms were therefore implemented, for example, a strengthening of the job tax deduction for low- and middle-income earners, reduced tax on pensions, reduced taxes on fuels, and an extended supplementary grant in the housing allowance for vulnerable households. The government has also previously reduced the reduction obligation for gasoline and diesel. Additionally, many economically vulnerable households have received compensation for the high inflation via price-indexed grants and transfers. For households with scarce resources, it provides more in the wallet and better conditions to manage increased costs for food and rent.
In order for more people to have it better in Sweden in the long term, the economy needs to grow, and more people need to enter employment. Therefore, measures are being implemented to strengthen the work line so that it will pay more to move from benefits to work. More companies need to be started and grow, and competition in certain industries needs to be strengthened.
Mikael Damberg (S)
Madam Speaker! I thank the Minister for Finance for the answer.
The background to my interpellation is that there has been a cost crisis that has hit Swedish households hard. We know that in one in three households in Sweden, people say they have difficulty making their income add up every month. We see that every second single person with a low income even has difficulty putting food on the table. It is clear that the cost crisis has hit extra hard against those with small margins from the beginning. But it has hit broadly; not least that the fact that interest rates have shot up in the way they have has tormented households in an exceptional way.
For an average family with two children with 3 million kronor in loans, life has become 100,000 kronor more expensive in 2024 compared to 2021. The majority of the cost increases come from interest rate hikes. For a single person with 2 million in loans, life is 55,000 kronor more expensive per year. It is clear that this has resulted in an enormous cost shock.
In this situation, one can reflect on how the government has been passive towards households through the cost crisis. The government usually says that everyone is affected by the high interest rates and inflation, but that is not quite true. There are some sectors that have earned a lot of money from the high interest rates. One such sector is the banking sector. There, the profits have increased dramatically.
When the Riksbank has raised interest rates, the banks have also taken the opportunity to raise interest rates on mortgage loans, but they have not been as quick to raise interest rates on current accounts or savings accounts. This has meant that a margin, an interest net, has been created, which has grown dramatically for the banks. And it is that which has driven much of the profit development in the banking sector.
In 2023, the four major banks made profits of 160 billion kronor after tax. In recent weeks, we have seen that one of the four major banks has reported its profit levels, and it can be stated that the net interest income has continued to increase this year compared to last year. The profit development has not subsided for the four large banks yet. On the contrary, it has continued to increase from high levels.
I mean that it is reasonable to ask the Minister for Finance if the government has any ideas on how one can use, for example, SBAB, a state-owned bank, to press the terms and increase competition.
Here, the Minister for Finance assumes that I want to set non-market conditions for the bank. But that is not what I have written. I am asking if there are any ideas to use in SBAB. I would very much like the Minister for Finance to elaborate on this issue. I think it is perfectly reasonable to review the return requirements for SBAB. This is done at regular intervals in the state-owned companies, and we can observe that the profit margins in Sweden are higher than in the rest of the Nordics and that the profit margins in Sweden are even higher than in Europe. One can certainly discuss which return requirements should apply on market conditions also for SBAB over time. It is reasonable to do so.
My point is that one might be able to use SBAB in other ways. An idea we have raised is that SBAB should offer a salary account, a transaction account. It sounds like a holistic solution; it would make it simpler to switch to SBAB. But de facto, it would increase SBAB's ability to finance itself and thus compete with the other banks in a completely different way.
Are there any ideas from the Minister for Finance? The proposal we have discussed and presented today is also a temporary bank tax. You take a little of the interest net and give it back to the households and welfare. Does the Minister for Finance mean that there is nothing to be done when households are pressured and the banks are making enormous profits?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I thank Mikael Damberg for an important question. It concerns, among other things, that many are currently struggling with small margins. Those who had small margins before are having it toughest, but even many of those who had margins today have small margins. It is an issue that affects many.
Actually, there are several parts to this. Let me say something about the competition in the banking market. There, I agree with Mikael Damberg's view that it is obvious that the competition is too poor because – I believe I understood you correctly – we have seen the profits we have seen.
The government's solution to this is not to reintroduce yet another bank tax. The Social Democrats did that together with other parties, and it has not really led to mortgage customers being better off. Instead, this is being shifted onto the mortgage customers and makes the loans more expensive. For the latest tax that the Social Democrats have proposed, we have calculated that it will result in around 4,000 kronor per year in increased interest costs for an average household. Naturally, one can have different opinions about that, but it is not the path we intend to take.
What do we do from the government's side to strengthen the consumers' position? It is three things. One concerns the interest rate differential compensation, that is, what one needs to pay if one wants to settle a loan prematurely. That may need to be done if one wants to change banks. Since there are a few larger banks but also quite a few smaller banks, it should mean that when one wants to move their loan, it should not be as expensive as it is today. We are now preparing a bill in that area.
The second matter is about the Finansinspektionen finally doing what we have pointed out previously, namely creating a digital amortization statement. Today it can be expensive to change banks, but it can also be cumbersome. One has to wait a week or two for a letter from the bank one has to then send it further. It should be digital, and it should be fast.
The third matter, and the important task, concerns the Swedish Financial Supervisory Authority (Finansinspektionen). They are now continuing the work of mapping and analyzing the consumers' position, and they will also return to us with proposals for more measures. Furthermore, we have given the Swedish Competition Authority (Konkurrensverket) more money to see what can be done to improve competition in various areas. These are parts that I believe are important so that all bank customers can put additional pressure on the banks. In that way, we can increase the competition.
There is still something there that I do not agree with in Mikael Damberg's picture, namely how the state as owner, actually the Swedish people as owners, should use different types of companies to exert pressure or whatever it may be. The company in this case, SBAB, is one hundred percent owned by the state, which operates in a competitive deregulated market. That market needs better competition, every day of the week. But I or we as the government should not step in and start proposing, for example, that one should have a salary account and completely change the bank's operations. It is something completely different for a bank to have transaction accounts, i.e., salary accounts, and that is something for the bank itself to decide on.
I believe that us as owners entering different companies and trying to price or steer in that way would be deeply inappropriate. I also do not perceive that we have the mandate of the Riksdag to do so.
Mikael Damberg (S)
Madam Speaker! I will begin with the last one.
It is obvious that the government has no ambitions to work to influence any situation here and now during this crisis.
That SBAB could offer a salary and transaction account would strengthen the bank. It would not weaken the bank. It would make the bank more profitable in its way of financing its own lending, so it is completely in line with the Riksdag's mandate to SBAB. But when I listen to the Minister for Finance, I understand why SBAB's management does not want to introduce a salary and transaction account. It is obvious that the Minister for Finance does not want SBAB to be able to have a salary and transaction account.
If one becomes as ideological as the Finance Minister seems to be here, to the point where one does not want the state to be able to do anything, then it becomes very passive. In that case, I understand that you take forward our investigation into reviewing the interest rate differential compensation.
It is good that it will become cheaper and easier to change banks - at the earliest in 2025. It is good that authorities are introducing amortization statements digitally, and it is good that Finansinspektionen is studying and analyzing the situation. But the government perhaps has a responsibility to drive the development and do something that affects the situation for those mortgage borrowers who are pressured by a very harsh situation today, and in that area, the government shows no interest in acting. I think that is stupid.
The temporary bank tax that we have proposed on the interest net is actually designed so that if the banks do not want to pay the bank tax, they can lower the interest net and thereby make it better for the customers. It creates an incentive structure for the banks to treat the customers fairly.
What also becomes clear when the Finance Minister so clearly says no to the banks participating and contributing to the common good in some way in a cost crisis is that it is why she says no to increased resources for healthcare. It is why she says no to our proposals for improvements, for example that the study grant for upper secondary school students should be extended over the summer. That means 5,000 kronor for a family with two children over the summer when the cost crisis hits.
It means that one cannot afford to make further efforts in the municipalities to stop the new recruitment and the gang violence that plagues Sweden today, and the municipalities have a key role in pinpointing and disrupting the young people who are on their way into crime or are already there in order to ensure that the situation is calmed and cooled down.
It is clear that an election will come when one is not prepared to take a portion of the large profits and excess profits that the Finance Minister says have arisen due to a lack of competition, when one does not take back any of those funds to strengthen society's ability to handle a national healthcare crisis, gang crime, the situation of households, or for that matter the low growth that Sweden currently has, which is very much due to a construction crisis that the government is doing nothing about.
One does not want a bank tax that brings this back, so my question is whether healthcare does not need more money. Your new temporary funds only for the year had no effect on the wages, the layoffs, or the savings programs all around Sweden. Are more resources not needed to stop the violence here and now, and do we not need to increase growth in Sweden? The answer to those questions seems to be no from the Finance Minister. It is quite striking that one comes to that conclusion.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I actually think a bit more about Mikael Damberg than that he misunderstands what I say. I think a bit more about him than that he is trying to put me and the government on some kind of passive spectator's bench. Probably it is the arguments that are failing.
Now this debate is also becoming quite broad. It is not just about SBAB but about much more. Let me then just say a few things.
As Finance Minister, I have no opinions on whether SBAB should have a salary account or not. The bank itself has dismissed it because it is not included in its strategy. It is not something that I sit at the Ministry of Finance and ponder over, just as I do not ponder over what exact interest rate—that is, what price on money—the banks should set, what wine should cost at Systembolaget, or what the train ticket should cost when one travels by train. The managements in all these companies have a task, a return requirement, which they must live up to. Then we always have dialogues about whether they are living up to this.
I still believe that Mikael Damberg thinks more of me than that I would engage in this type of micro-management. It is not about ideology; it is about the Riksdag being clear about how we should ensure that these companies actually create value, sustainable value, both economic and others.
I am dropping the discussion about SBAB now. We can gladly disagree on that.
When it comes to the competition between banks, it is absolutely true that it should become much better. I have said many times that the profits that have been made just during the last year have, to say the least, been glaring. I and we really want to ensure that the banks use those funds in a significantly better way. That they give back to the customers, I think, would be completely reasonable, but also that they put much more money into making sure that the frauds are seriously stopped. Here, the banks have a very great responsibility.
Just to mention the bank tax, Madam Speaker: We do, therefore, have a bank tax in Sweden. I do not know how Mikael Damberg thinks it went - whether it turned out that the mortgage customers received so much of this. I am convinced that it trickles down and is passed on to the mortgage customers.
Then it is better that we do what we can do, namely to ensure that competition is improved in various ways. Mikael Damberg may think that is good or bad. I am convinced that it will be good for the bank customers.
Finally, something about the general situation, about inflation. Now inflation is on its way down. Interest rates are on their way down. This will make things easier and be good for very many, and that is pleasing. It depends on an active choice to maintain restrained budgets and at the same time support welfare and households. That Mikael Damberg does not share the Moderates' view of this is hardly surprising. But we have taken great responsibility. We are bringing down inflation, and we are now ensuring that we can actually take Sweden through a very tough economic period.
Mikael Damberg (S)
Madam Speaker! Yes, it is good that inflation is falling in Sweden, as it is also doing in the rest of the world.
We can observe that Sweden has had higher inflation than comparable countries and far fewer measures to support groups that are struggling very hard financially with small margins.
One only has to look at comparable countries in the Nordic region. All countries in the Nordic region except Sweden have, during this cost crisis, increased the child allowance in one way or another because it is known that many families with children are hit hard by the cost crisis due to both increased interest rates and increased rents. Increased food prices hit extra hard. We are now receiving reports that many families refrain from having their children participate in sports activities or cultural activities because they cannot afford it.
I do not think this government has seen the reality for very many households that have had it tough.
My interpellation is primarily about the banking sector because we agree that the profits are glaring. We agree that they have been too high. But the government and the Minister for Finance are very hesitant to think of anything that can increase competition in the short term and improve the situation, and in that, I think one is passive. It is well the very definition of passive that one does nothing and does not want to be able to do anything.
It is actually extra provoking that the Minister for Finance says she may have views on how the banks should use their profits. She may have views there, but she cannot have views on taking a part of the profits and bringing them back to the households when we can actually decide directly that they go to the families with children or to healthcare in this economic crisis.
In some way, the Finance Minister becomes liable. If one is not prepared to increase competition in the sector in some way, then one lets the households stand there and hopes that the banks will not take such large profits in the future. Or one decides to increase competition here and now. I am happy to cooperate with the government if they have ideas about that. And one could have a temporary bank tax, which many European countries have had, to bring the money back to households and welfare. The government chooses to refrain from that, and then it comes with a cost.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Yes, I have views, but that does not mean that I go in and direct the individual companies' boards and tell which accounts the banks should have and what interest rates they should apply. One can have views that the banks collectively have taken out far too large profits instead of using them, for example, to increase their costs for tools so that older women and men are not subjected to fraud. There, they have a great responsibility.
Yes, competition will be improved, with changed interest rate swaps and better opportunity to get one's basis when switching banks and moving mortgage loans. All of this will make a difference.
And finally: This has been a tough time for very many households. Therefore, despite the fact that we have pursued a restrained fiscal policy, it has been very important that we have been able to lower the tax on work, lower the tax for pensioners, lower the fuel tax, and change the reduction obligation so that diesel became 4 kronor cheaper from December 31 to January 1. It has also been important to continue building Sweden strong so that companies can grow and become larger.
It has been and is very important that we ensure that the welfare sector receives the resources needed to support. I have said it many times: the State cannot compensate for everything, but it is important to provide support in a tough time.
It looks like things are brightening. Inflation is going down, which is very pleasing. We are still in a recession, but because inflation is going down, we are now switching over to a more normal cyclical policy, supporting the economy and meeting the consequences of the high inflation.
Then we do not do this exactly as Mikael Damberg wants, and that is well what it is about having eight different parties in Sweden's Riksdag. I am very happy and satisfied that we are nevertheless four parties who together submit budgets that pass here in the Riksdag - which facilitate and ensure that both defense, police, the justice system, household, and welfare are strengthened in a tough time.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.