Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Top Stories

Swedish banks: brighter prospects as housing crash fears recede

Swedish banks: brighter prospects as housing crash fears recede

Sweden is emerging as a bright spot in European banking. Scope has upgraded its issuer ratings on Swedbank and Svenska Handelsbanken in recent weeks and maintained its high rating on Nordea. As fears of a housing crash recede, prospects look brighter.

Sweden’s major banks are very profitable. Returns and efficiency ratios are among the strongest in Europe. And their capital ratios are higher than those of most European peers. This will probably remain the case even after changes proposed by the Swedish regulator to the way mortgage risk-weight floors are calculated.

Regulatory adjustments that will reduce the headline capital ratios of Swedish banks are purely technical in nature and reflect no change to the solvency position of the banks,” said Jennifer Ray, executive director in the financial institutions team at Scope Ratings. “They will be expected to maintain a similar level of nominal capital against the same basket of risks.”

Large Swedish banks currently maintain good access to senior unsecured funding and other market segments, particularly covered bonds. They also have robust liquidity reserves. But like other European banks, they are nominally exposed to a shift in wholesale market funding conditions and this remains a (somewhat latent) concern if the market suffers sustained credit-spread widening and constricted access windows.

The banks currently enjoy very low credit costs. “While we do not necessarily expect the cost of risk to remain so favourable, the banks appear well positioned to deal with the normalisation of the credit cycle and higher resulting credit costs,” said Ray.

Scope’s recent rating actions on Swedish banks are noteworthy, as the credit positives deriving from the banks’ business profiles and forward prospects outweigh concerns about a hard landing in the country’s over-heated housing market, which Scope considers unlikely. Swedbank’s Issuer Rating was upgraded on 24 May by one notch [to A+ Stable]; as was Svenska Handelsbanken’s [AA- Stable]. In its 24 March rating update on Nordea, the Issuer Rating was maintained at AA-Stable.

There had been concerns about the impact of a collapse in the Swedish housing market on the banks as recently as last year; specifically around the part the banks were playing in perpetuating the cycle, with memories of Sweden’s banking crisis of the 1990s still lingering.

“Although potential for further pricing weakness remains, we’ve taken a more measured view on the housing market, on the basis that a whole host of structural factors have supported the boom. We came to the view that while the major banks have been expanding their property portfolios, this has been against a backdrop of a growing economy and a rise in household wealth,” said Ray. “We sense the larger banks have become more cautious over time and are certainly more focused on cashflow and valuations in making lending decisions.”

For the research report, please click here.

Global Banking & Finance Review


Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!

By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post