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Swedbank leaps on strong interim report

Sweden's Swedbank stock jumped on Thursday after the firm posted stronger-than-expected third quarter operating profit, lower credit losses and a profit in the Baltics for the first time since late 2008.

Swedbank leaps on strong interim report

The bank reported a third quarter operating profit of 3.2 billion kronor ($480 million), a dramatic turnaround on a loss of 2.58 billion in the corresponding period of 2009.

Analysts, according to a Reuters poll, had forecast an operating profit of 2.1 billion and Swedbank stock responded accordingly on the Stockholm market on Thursday, up 6 percent in morning trading.

“Our positive trend from the first two quarters continues, primarily driven by the large reductions in credit losses. We are very happy over the fact that the Baltic banking operation is showing a profit for the first time since 2008,” said Swedbank CEO Michael Wolf in a comment on the report.

The bank has seen a steady reduction in credit losses in the Baltics, Latvia excepted, Wolf said, while pointing out that “credit demand remains low” as business and private people prioritise paying off their loans.

“We have seen a massive change in customer habits. An increasing number are choosing to fix their interest rates, he said.

Michael Wolf forecast continued improvements to Swedbank’s figures, as long as the macroeconomic development is maintained.

After Swedbank’s share price climb on the Thursday, the company’s stock has climbed a total of 38 percent since the turn of the year, and 68 percent over the past 12 months.

Total revenues in the period amounted to 7.54 billion kronor, down from 8.14 billion in the corresponding period of 2009. Costs declined from 4.53 billion to 4.24 billion for the period.

Credit losses declined to 120 million kronor, down from 6.12 billion in the third quarter 2009.

Net interest income fell to 3.98 billion kronor from 5.02 billion kronor, although strengthened for the first time in six quarters. Net commission income meanwhile rose to 2.31 billion kronor from 2.21 billion kronor.

Swedbank’s Baltic banking operation reported a profit in the third quarter, the first time since the fourth quarter of 2008.

Swedbank’s board has made a decision regarding “far-reaching changes” to the bank’s bonus program. Contingent on the approval of the 2011 AGM, some bonus related pay provisions will be replaced by shares.

The new bonus program is set to cover around 6,400 employees, primarily in the Swedish arm of the group.

During the last twelve months, Swedbank has raised almost 300 billion kronor in long-term debt, including about 40 billion kronor during the third quarter.

“This we have been able to do while we continually improved our relative cost of borrowing compared with the other Nordic banks,” said Michael Wolf.

Lending volumes to Swedish corporate customers stabilized in the quarter, breaking the longer term negative trend.

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BREXIT

Brits in EU risk losing UK bank accounts ‘within weeks’

Some of Britain's biggest banks have begun contacting customers in European Union countries, warning them that their accounts will be closed down within weeks because the cost and complexity of operating without a continuation of pan-European banking rules is too much.

Brits in EU risk losing UK bank accounts 'within weeks'
Lloyds Bank expects to close at least 13,000 accounts. Photo: Lloyds Bank
According to a report in The Times, thousands of Britons who live in Europe face being stripped of their UK bank accounts and credit cards, because of the UK government's failure to agree rules for operating after Brexit. 
 
Each of the EU's 27 member states has different rules for cross-border bank accounts which will start to apply immediately the UK's transition period ends on 31st December 2020. 
 
“In some cases, continuing to serve customers would be incredibly complex, extremely expensive and very time-consuming, and simply would not make economic sense,” a source at one British bank told the newspaper. “This is passporting — this is the reality of Brexit.”
 
 
If a way is not found to continue pan-European banking rules, or passporting, UK banks will br breaking the law if they don't apply for new banking licenses in each European Union Country. 
 
 
Lloyds, Britain’s biggest banking group, began writing to customers in August, warning them that their bank accounts would  close down on December 31.
 
The bank estimates that 13,000 customers, including those based in Holland, Slovakia, Germany, Ireland, Italy and Portugal, would lose their accounts. 
 
“If customers have regular deposits into, or payments out of, their account, they will need to make other arrangements before their account is closed,” the bank said. 
 
Barclays and Coutts have also started contacting customers. 
 
“In light of the UK leaving the EU at the end of 2020, we continue to review the services we offer to customers within the European Economic Area (EEA), and any impacted customers will be contacted directly,” Barclays said in a statement. “The timings for account closure will depend on the type of product that a customer holds, but we will always give notice to customers.”
 
“In the event that no alternative to the European Economic Area passporting regime for financial services is agreed between the UK and EU, we have taken the difficult decision to withdraw from offering our services to clients who reside in the EEA,” Coutts said. 
 
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