Two of Sweden’s leading chief executives have called for a co-ordinated global response to the coronavirus crisis to ensure industries can return to work as quickly as possible when it is safe to do so.
Henrik Henriksson, chief executive of truckmaker Scania, told the Financial Times that supply chains were integrated across Europe to such an extent that it would be vital for restrictions on movement to be lifted simultaneously. “If it is not restarted in a synchronised manner, we will not get out of the trenches,” he said.
Johan Torgeby, chief executive of bank SEB, said in a separate interview that the banking system was “very, very stable” but that regulators and governments needed to be careful not to demand too much. “What I’m worried about is that we do not create a banking crisis on top of the corona and economic crisis,” he said.
Swedish executives have been the most vocal in Europe about the need to be careful that measures taken to tackle the pandemic do not do unnecessary harm to the economy.
Swedish industrialist Jacob Wallenberg told the Financial Times last week that he feared economic depression and social unrest and that authorities were “not taking the longer-term perspective”.
Sweden has responded to the pandemic differently from many European countries — it has not closed its schools or its borders, unlike all its neighbours.
Mr Henriksson said this was mostly due to the fact that “we haven’t really hit the tough part of the virus yet”. But he also argued that Sweden had a strong tradition of listening to expert advice and that scientists and health officials were at the forefront of deciding how to respond.
Scania said last week it was temporarily laying off almost all its workers in Sweden, 19,000 in total. Mr Henriksson said he would decide if operations could start returning to normal by Easter or if more cuts would be required.
All Scania’s plants — in both Europe and Latin America — have stopped work because of difficulties in obtaining parts from “60-70 suppliers” in Italy, France and Spain. He argued that authorities needed to plan for reopening borders and easing restrictions on movement.
“Even if the virus is at different stages, we need some kind of co-ordinated restart,” he added. A failure to co-ordinate could lead to wider job losses, with both Scania and its customers facing liquidity problems, he said.
Mr Torgeby said the current crisis was different from anything that anybody in the bank had ever experienced. He argued the restrictions on movement and the imposition of emergency laws in many countries meant the crisis most resembled “wartime or a natural catastrophe”.
SEB and other banks had three “cornerstones” in a crisis, he said: regulatory capital; attractiveness to outside investors; and a responsibility to customers and society. “The balance between these three is what we are facing.”
Sweden’s financial regulator has urged banks not to pay dividends, while Norwegian regulators have asked the government to ban them from doing so, a request that was turned down.
SEB has postponed its dividend for this year, “which buys us some time for what dividend is appropriate”, Mr Torgeby said. He added that it was important “to take care of the people who are providing the money that we deploy”, namely investors.
He said his fear was “how long and how deep will we go before we get the wheels of society spinning again?”
“There’s a risk: what are the side effects of this medicine against the costs of the illness itself. It’s not one against the other; it’s trying to optimise the societal impact.”
Source: Economy - ft.com
