Regulatory Requirements for Banks in Sweden

Senior Management

In Sweden, banks are required to have a competent and suitable senior management team. Here are the key regulatory requirements:

• Suitability Assessment: An application must be filed with the Swedish Financial Supervisory Authority (SFSA) for appointing new members of senior management, including the chairman of the board, board members, alternate board members, managing directors, and deputy managing directors.
• Background Checks: The SFSA collects information from various authorities and firms providing credit assessments as part of the suitability assessment.
• Responsibilities: Senior management must possess sufficient insight and experience to participate in management and be suitable for such duties.

Accountability

Banks in Sweden are accountable for ensuring compliance with regulatory provisions governing banking business. Here are the key requirements:

• Board Responsibility: The board of directors is responsible for ensuring compliance with regulatory provisions.
• SFSA Intervention: The SFSA can intervene against members of senior management where infringement is serious, caused intentionally or through gross negligence.
• Compensation: Senior management may have to compensate damages caused due to infringements of the Banking and Financing Business Act and the Companies Act.

Remuneration Requirements

Banks in Sweden are required to establish a documented remuneration policy that promotes sound risk management. Here are the key requirements:

• Remuneration Policy: Banks must establish a documented remuneration policy that promotes sound risk management and counteracts excessive risk-taking behavior.
• Board Decision: The board decides on remuneration for senior management, employees responsible for control functions, and measures to review the application of the remuneration policy.
• Variable Remuneration: Variable remuneration should not limit the company’s ability to maintain a sufficient capital base. Performance assessment for variable remuneration primarily relies on risk-adjusted profit measures.
• Specially Regulated Staff: Specially regulated staff includes senior management, employees in strategic positions, control functions, risk takers, and those with high total remuneration.
• Deferred Compensation: Variable compensation for specially regulated staff may not exceed fixed compensation and must be deferred over a period.

This overview provides insight into the regulatory landscape governing banking practices in Sweden, focusing on the oversight of senior management, accountability for compliance, and guidelines for remuneration structures to ensure sound risk management.