Former Swedbank Estonia CEO Robert Kitt (42) tells Postimees in an interview what he thinks of his removal, how foreign labor could do a disservice to the Estonian economy and how to reorganize higher education so it would serve Estonia’s interests.
You wrote on social media that you are done with banking on the day you left Swedbank. Does this mean you no longer want to work in a bank or that you’re not allowed to?
What I meant was that if one has been the CEO of Estonia’s largest commercial bank for 4.5 years, it is very difficult to find challenges of equal value in Estonian banking.
Also, having been the head of Swedbank and privy to confidential information of clients, it would be highly unethical to go work in another bank right away. My contract also has provisions to guard against that.
The third question is whether I want to work in banking again. Time will tell. It would be neither possible nor interesting today. Would watchdogs allow me to work in banking again in the future? We shall see. I will talk to them once we have something to discuss.
How will the money laundering scandal end for Swedbank?
Hard to say. The share price has taken a tumble. Executives (Birgitte Bonnesen also left as CEO of the group – ed.) have left, while the investigation and proceedings are ongoing. I cannot say how it will end.
Are you afraid things will take a turn for the criminal and you’ll have to deal with the police or the prosecution?
If it happens, it happens. But I will cross that bridge when I come to it. Swedbank will remain and continue catering to its clients. I will also move on with my life. One needs to realize that a chairman of the board’s contract is not forever. The risk that you won’t be needed anymore is always there. Is it fair? I believe I’m not competent enough to answer that.
To what extent do you see money laundering scandals as past events being reevaluated based on current knowledge and new legislation that didn’t exist back in the day?
That is how it is. I’m reminded of the so-called Panama papers scandal (it turned out in 2016 that a lot of prominent persons, including from Estonia, had used offshore companies to optimize taxes – ed.).
If up until that point the paradigm had been that schemes and offshore entities were not prohibited, things changed after the scandal as people came to believe that while offshores were not banned as such, they were no longer acceptable either. The same goes for 1990s’ business practices.
Coming back to money laundering suspicions, we also have a lot more information today, in addition to changes to legislation and monitoring. A transaction that did not look suspicious in 2012 could look dubious today as we have more databases and background we can check. Things we didn’t know back then. That is definitely something people should keep in mind.
What is the biggest problem in Estonian economy today?
The biggest problem is people, number of employees and their salaries. We are the best in Europe when it comes to employment. We have the most elderly people employed. That is to say most people have found something to do.
Post-crisis economic development has largely been based on boosting employment and hiking salaries for existing labor. This has translated into salary expenses, smaller profits and investments.
Now, we have a choice whether to continue with the old model and find more labor, from abroad and third countries if necessary, or move toward business models where we have fewer workers making higher salary. The latter requires better productivity, use of modern technologies and innovation.
Entrepreneurs saying that we need foreign labor are living in the past, unable to innovate?
No, that is too confrontational. We need to realize that 95 percent of our companies pursue no cooperation with universities. We should never resort to extremes when analyzing the economy.
Let us take the example of a hospital: it has a few neurosurgeons, a couple of cardiothoracic surgeons and some general surgeons. It has far more nurses, orderlies and other support staff. Society is much the same. Around 80 percent of people in Estonia make less than the average salary. That is to say countries are home to many people and they all need jobs.
What is your opinion of the government’s mandatory funded pension reform?
We should not get caught in black and white answers, only being for or against something. I believe the pension reform has redeeming qualities, such as giving people more choice through the creation of an investment account system, letting people decide how to invest their assets. Such flexibility is very welcome.
At the same time, what is not welcome is the plan to allow people’s pension pillar to be put in pledge, with bailiffs given the right to seize savings if they owe money. That is not okay. So, it is very easy to label the reform as either bad or good. I find it is both.
How likely are people to simply withdraw their savings and spend the money on everyday expenses or entertainment?
It is very difficult to forecast. It could even depend on the day savings are released, moods in society at that moment. It could also be affected by markets. If the markets have tumbled on the previous day, it is likely people will withdraw the money. Or it could be the opposite. Short-term financial market fluctuation is quite random. I am sure, however, that pension savings should not be used to play games.
Let us talk about education. Entrepreneur Ruth Oltjer recently spoke out about TalTech (Kitt has a PhD from the university – ed.) when she said it is churning out too many public administration majors. Is it a problem?
Certain curricula being popular is not a problem. The thing to keep in mind is whether they are costing society too much.
We need more engineers, but people usually do not want to study engineering because it is hard. It all boils down to whether a person is willing to work hard or not. Studying to be a doctor or an engineer takes huge amounts of work, while it might not pay all that much.
I would refrain from criticizing public administration. Having had contacts with universities, I know how hard they work to make curricula relevant and interesting. I agree with TalTech Prorector Hendrik Voll who said they are proud of all their specialties.
Should university be free?
University is never free! We simply have state-funded higher education. I would rephrase the problem by saying we need to be moving toward a much clearer causal link between studying and responsibility. All participants should share in the responsibility: the state, local government, university and finally the student.
Professors are saying there aren’t enough students. But have they toured high schools to promote their specialties? Local governments complain that people do not want to live in rural areas. Have they offered to pay the utility bills of those willing to come and teach Estonian there? Before you criticize something, you should ask yourself what you have done to change things.
One option is to look at higher education through education contracts. This means the state will pay for your studies if you agree to put your know-how at Estonia’s disposal for a time, give something back. If you’re lazy or not sharp enough, you drop out and must return the money. If you go abroad, you return the money. Like in business, where investments have a pay-back period. It is something to consider.
While I understand you do not want to say what will be your next job, could I at least inquire as to the field?
I have been spending a lot of time in Mustamäe these days, helping to develop TalTech’s alumni body, and I have a few more plans at the university.
In general, however, I will be keeping my eyes and ears open to see what life will bring me. I have 25 years of experience in banking and ten years in management. I have managed 2,500 people. I believe places where such experience could be useful can be found.