Tougher rules await bonus-happy Swedish banks as bonuses keep swelling despite declining profits.

Last month US President Barack Obama said on "60 Minutes" that he "did not run for office to be helping out a bunch of fat cat bankers on Wall Street." The same seems to go for Swedish Finance Minister Anders Borg as he Wednesday slammed swelling Swedish bankers' bonuses as “a provocation” and now threaten to launch even tougher regulations.

Although bank managers have promised to cool down the additional benefits a report from the Swedish Financial Supervisory Authority earlier this week said that Swedish bank managers received bigger bonuses in 2009 than the previous year, despite lower profits due to the financial crisis.

The ministers announcement came the same day as newspaper Svenska Dagbladet wrote that SEB, Sweden's third-biggest bank in terms of market capitalization, will hand out bonuses of 1.8 billion kronor ($257 million). That is likely to exceed the bank’s profits.

The massive bonus payment is a blow to shareholders as dividend is likely to be scrapped because of the global financial turbulence and the economic crisis in Latvia.

During last year’s first three quarters the bank put aside 1.5 billion kronor in bonuses and is likely to ad another 300 million kronor for the last quarter, the newspaper wrote. According to analysts the banks profit will plunge from 10 billion kronor in 2008 to 1.5 billion in 2009.

Bonus-happy banks now face tougher rules, similar to those penalties on high bonuses that have been implemented in France and the UK and also are expected to be announced by US President Barack Obama later this week.

“The fact that they (the banks) aren’t hearing these signals which have been very clear is a provocation,” Swedish Finance minister Anders Borg told the TT news agency.

“I’m convinced that we’re going to have a renewed debate about gradually strengthening the rules if the banks don’t get the message that the general public can’t accept this kind of behaviour, when profits depend to a great extent on public funding, ” Borg said.

Since the turn of the year bonus payments have to be based on long-term achievements, according to new regulations. The payments also have to be made over a long period of time. Declining profits could lead to reduced or drawn in bonuses.