Sweden’s biggest mortgage bank ousted its chief executive officer after seven years, saying the time was ripe for a change in leadership, as it tries to restore confidence lost because of real estate deals by some of the bank’s most senior managers.
Michael Wolf, 52, will be replaced by Birgitte Bonnesen as acting CEO, Swedbank AB said in a statement on Tuesday. Bonnesen will continue to run the lender’s Swedish banking unit. A permanent replacement will be presented “as soon as possible,” the bank said.
Wolf’s departure is “bad news for Swedbank,” Karl Morris, an analyst at Keefe, Bruyette & Woods in London, said in an e-mailed response to questions. “Wolf was highly regarded so this will not be taken well.’’ Swedbank shares fell as much as 4.9 percent in Stockholm trading, their steepest intraday decline since Aug. 24, and traded down 4.7 percent at 159.5 kronor at 12:28 p.m. local time.
Swedish media speculated that Wolf’s dismissal was linked to an earlier departure from the management team. Swedbank was the focus of a series of articles last year by Dagens Industri, which said Chief Financial Officer Goeran Bronner and Magnus Gagner Geeber, then the head of large corporates and institutions, had made real estate investments that could be considered a conflict of interest given their leadership positions. Swedbank said in December that Gagner Geeber would leave, but denied any link to the media reports.
The real estate deals have “hurt confidence in the bank,” Swedbank Chairman Anders Sundstroem said in an internal letter to employees, obtained by Bloomberg. While the main reason for the change in leadership was to find a new CEO who can increase the pace of transformation and reach the bank’s targets faster, the real estate investments played a “subordinate role” in the decision, Sundstroem said on a conference call. Wolf knew about the property investments and could have stopped them had he wanted to, the chairman said.
The financial regulator opened an investigation into Swedbank in December, according to spokesman Peter Svensson. He declined to provide further details, citing the agency’s policy not to comment on reviews that are in progress.
Wolf was “not the right person” regarding the next step for Swedbank, Sundstroem said, adding that the bank needs to improve client and employee satisfaction. The lender needs new leadership “that can be close to our operations, our customers and our employees,” he said in the internal letter.
In Svenskt Kvalitetsindex’ latest bank satisfaction survey, Swedbank got a score of 66.2 from private clients, lower than the industry average of 68.2. Among corporate customers, it received a score of 64.4, also lower than the industry average of 68.9.
Sundstroem said he plans to remain as chairman and that he has full faith in Swedbank’s CFO. Carl Rosen, the CEO of the Swedish Shareholders’ Association, said Wolf’s departure marks “the first step to restoring a sound culture in Swedbank but it shouldn’t be the last. It’s not the end of the story.”
The association also accuses Swedbank of selling what were essentially indexed funds as though they were actively managed. Sweden’s financial regulator last year chided institutions it said had been caught selling closet index funds, and warned them to end the practice. The agency didn’t name specific companies. Swedbank has denied any wrong-doing.
Despite the recent criticism of the bank, Wolf has during his tenure as CEO delivered better returns than at any other of Sweden’s largest banks. Since the beginning of March 2009, the month Wolf took the helm at Swedbank, the bank’s share price has soared as much as 1,000 percent. Over the same period, the Bloomberg index of European financial stocks has added about 30 percent.
“We are disappointed,” analysts at J. Safra Sarasin said in a note to clients as they downgraded their recommendation on the stock to neutral from buy. Wolf has been successful as CEO and the company’s financial performance has been “very strong and well rewarded by the stock price,” the analysts said.