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Handelsbanken batthing its workers with money as Oktogonen gets even richer

Wednesday, 10 April 2013
Handelsbanken's strong stock market performance and rising dividends has significantly inflated the value of the banks employees' profit-sharing portfolio. This has meant that its workers as said to be awash with money.

According to Swedish business daily, Dagens Industri, Handelsbanken profit-sharing scheme, or roughly translated as profit sharing foundation, Oktogonen has seen its portfolio value for the first time reached over Skr20 billion. At year-end, its value stood at over Skr16 billion, and in last December 2011, the market value was over Skr12 billion.

The portfolio consists of 90 percent of the Class A shares in Handelsbanken. In March the shares traded to record levels, around Skr290 billion, up 25 percent from year-end, writes the paper, Dagens Industri.

Handelsbanken puts the shares profit back to Oktogonen each year when the bank reach specific targets for return on equity.

In 2012 the Foundation was made more money than ever, Skr1.02 billion. It was a result of the Bank raising its dividend provision to Oktogonen which may not exceed 15 percent of the dividend to shareholders.

Approximately 22,000 current and former employees at Handelsbanken are taking part in Oktogonen. From the age of 60 they have the right to request their share of the money. The percentage depends on the length of employment at the bank.

The maximum amount of Skr14 million assumes that the person worked full time at Handelsbanken since 1972, but no such employee exists, according to Oktogonens Chairman, Tommy Bylund speaking to Dagens Industri.

To throw more light on the scheme, Octogonen is a foundation for profit-sharing within Handelsbanken. It has been in operation for over 30 years, longer than any comparable system in Sweden. The system is a combination of profit-sharing and collective employee ownership.

Handelsbanken says that the system stands out as an important pillar in a company aiming at a long-term and trustful relationship with its employees. The fact that the individual cannot access the shared profit before the age of 60 gives it the character of a pension system.
by Scancomark.com Team

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