Second bank joins Sweden’s loan guarantee scheme

Volvofinans Bank AB has said it will apply to participate in the loan guarantee programme contained within the Swedish government's financial stability package.

The move makes the small bank, whose core business is auto financing linked to carmaker Volvo Car Corporation and its parent company, Ford Motor Co, the second bank to join the programme.

Swedbank is so far the only one of Sweden’s four big banks to participate in the loan guarantee programme.

The scheme was introduced last month as part of a package of measures to boost financial stability and allows banks a state guarantee for new funding in return for a fee of 0.5 percent of the loans or more.

Volvofinans Bank, in which Volvo car retailers own 50 percent while the Sixth AP pension fund owns 40 percent and Ford the remaining 10 percent, said in a statement it would submit its application to join the scheme in the coming days.

The bank has a loan portfolio of about 25 billion kronor ($3.15 billion), it added.