Savings economist: Banking culture resembles a cartel

The crisis of confidence in banks

Published 24 July 2023
- By Editorial Staff

The debate on bank profits has intensified in the wake of inflation and interest rate shocks. Savings economist Claes Hemberg criticizes the banking sector for its huge profits and calls for more competition and transparency. Jan Bertoft, secretary general of Consumers Sweden, urges bank customers to become more active and switch banks.

Hemberg has been highly critical of the banking sector, saying that the huge profits are proof that the industry is not working properly.

– We see grotesque profits. They are proof that the industry is not working, says Hemberg.

He points out that banks are probably no more greedy than other organizations. But he believes the industry is structured in a way that gives banks the freedom to be greedy.

It’s particularly difficult with mortgages because they’re more abstract. And also: big money and percentages. Of course, the mortgage giants take advantage of this. That’s why they’re making a lot more money today than they were last year. And interest rate rises in themselves should not lead to higher profits, Hemberg tells TT.

The four big banks have adapted to each other over the past decades. They behave in much the same way. They move interest rates up and down in the same way, they have the same hard-to-understand terms and tricky ways of negotiating. They have the same methodology. It’s a cartel-like culture, he says.

Meanwhile, banking analyst Andreas Håkansson of Danske Bank defends the banks’ profitability. He says the debate about banks’ interest profits is “populist” and that banks are no more profitable than many other listed companies.

If Swedish banks had not been so profitable, the market would have been worried about banks in general. That would have driven up the banks’ funding costs and made it more expensive for Swedes to borrow money, says Håkansson.

Jan Bertoft, secretary general of Consumers Sweden, urges bank customers to be more active and change banks if they are dissatisfied. He also wants politicians and authorities to review competition and introduce new accounting requirements to make it easier for customers to choose the right bank.

– Change bank! Try it out! Negotiate your mortgage rate. Get several banks, where you get more for your money. And tell them when you are unhappy. Email the bank. ‘One email doesn’t matter, but if there are many people emailing about the same thing, it can get out of hand, he adds.


TNT is truly independent!

We don’t have a billionaire owner, and our unique reader-funded model keeps us free from political or corporate influence. This means we can fearlessly report the facts and shine a light on the misdeeds of those in power.

Consider a donation to keep our independent journalism running…