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Swedish banks pass EU stress test

TT/AFP/The Local · 16 Jul 2011, 10:49

Published: 16 Jul 2011 10:49 GMT+02:00

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The banks taking part in the test were Sweden's Nordea, Handelsbanken, SEB and Swedbank; Denmark's Danske Bank, Jyske Bank, Nykredit and Sydbank; Finland's OP-Pohjola and Norway's DNB NOR.

All the banks passed their tests with comfortable Tier One capital margins, the regulators said in separate statements.

The Swedish banks passed the test with a "good margin", between 8.6 percent and 10.5 percent, well above the 5.0 percent Tier One capital requirement laid down by the European Banking Authority, the organisers of the test.

The Swedish Financial Supervisory Authority (Finansinspektionen - FI) estimated that the Swedish banks have sufficient capital to survive in the event of a financial crisis.

Solvency and high earnings, combined with a low exposure to regions in economic crisis, means that this year's stress test will not lead to any dramatic changes for Nordea.

"We're satisfied to have performed so well, it's evidence that we are well-prepared for crises. It's an acknowledgment of the fact that we are a low-risk bank, and very robust," said Rodney Alfvén, investor relations manager at Nordea, to news agency TT.

Alfvén concludes that European Banking Authority have tightened rules for the stress test, which was criticised for being too easy last year.

"The test was tougher than last year's, they had higher demands this year," he said.

The Nordic bank system's positive results in the stress test is great news, said Anders Kvist, financial manager at SEB.

"And in our individual case, it's nice to see that we have a better capital ratio than any other Swedish bank.

Story continues below…

High earnings and low risk are Anders Kvist's recipe for success.

"We have a portfolio that doesn't contain too many risk factors. This means that even when this test supposes a very negative macro-economic development, leading to credit loss, losses are not so great in SEB's and the other Swedish banks' credit portfolios," he explained.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

14:35 July 17, 2011 by farnoxo
The million dollar (probably a lot more in today's money) is ... what exposure do Swedish banks have to sovereign debt in the PIIGS (Portugal, Ireland, Italy,Greece and Spain)? In the (increasingly) likely event of a Greek default, the contagion is likely to spread very quickly to other weak Euro countries (witness the recent jump in Italian bond yields).

The recent EU bank stress tests did not model a Greek default ... would a Swedish bank sitting on a big long position of PIIGS debt survive despite their high Tier-1 capital ratios?

Look forward to some fun and games in Euro debt markets before the summer is out :-)
14:52 July 17, 2011 by Nemesis
This must have been a very easy test.
10:42 August 5, 2011 by Grindsprint
@Nemesis please elaborate. What do you actually know about this?
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