Handelsbanken under fire on shift in industry shareholdings

STOCKHOLM, March 26 Wed Mar 26, 2014 12:00pm EDT

STOCKHOLM, March 26 (Reuters) - A move by Handelsbanken to change the level of its shareholdings in several Swedish companies to allow board members to also remain directors at other companies was criticised by shareholders and local media on Wednesday.

A new EU banking industry directive called CRD IV which is due to be implemented in Sweden in July limits the number of other board positions a director at systemically important financial institutions can hold to three.

In Sweden where a number of cross shareholdings still feature it has long been common practice for people to sit on several boards but under the EU directive only if a bank owns 10 percent of the votes in another company is a board member of both companies deemed only to be a representative of the bank.

As a result Handelsbanken said late on Tuesday it had made mutual reallocations with its pension funds of holdings in investment group Industrivarden, Svenska Cellulosa and other companies which gives it control of just over 10 percent of votes in both Industrivarden and in SCA.

Three of Handelsbanken's board members also have seats on SCA and Industrivarden, including Handelsbanken's chairman, Anders Nyren, who also has seats on the boards of Sandvik and Volvo.

Conversely Industrivarden holds significant stakes in Handelsbanken, SCA and Volvo as well as several other Swedish groups such as Ericsson and Skanska.

The Swedish Shareholders' Association said the move made a mockery of its members interests and was trying to skirt round rules which were meant to protect the banking sector.

"Failing to take it seriously and act responsibly is extremely short-sighted," Albin Rannar, head of market monitoring at the association told Reuters.

"It will hurt the bank's reputation, value, its shareholders - putting the entire business group's future at stake," he said.

"The bank should be a bank, not an instrument of power. It should not be a shareholder of SCA. If you buy shares in Handelsbanken, you should know you are investing in growth in the UK ... not in diapers."

Swedish business daily Dagens Industri quoted Mats Andersson, CEO of AP4 pension fund, as saying that the bank's success was built on its banking focus, not diversification into other areas.

Handelsbanken shares were down 0.4 percent at 336.80 crowns by 1548 GMT.

But Sweden's financial markets minister said he had no issue with Handelsbanken's decision, so long as it followed the new EU rules.

"As long as the bank does that, I think this is a matter for the shareholders and the management of the bank, how they choose to organise. And I really have no opinion when it comes to that," Peter Norman told Reuters.

Sweden, which has said it will adopt the EU rules with reluctance, had lobbied hard for a transition period.

The rules are also expected to affect Sweden's three other big banks - Nordea, SEB and Swedbank , and members of Sweden's Wallenberg family who sit on multiple boards. (Additional reporting by Olof Swanberg and Daniel Dickson; Editing by Greg Mahlich)

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