Swedbank CEO demands amortization law

Swedbank CEO Michael Wolf has proposed that Sweden adopts a law requiring mortgage amortization to ward off the threat of spiralling household debt to the Swedish economy, according to a report in the Dagens Industri (DI) daily.

Swedbank CEO demands amortization law

“It is important to do something about this while we still can,” said Swedbank spokesperson Thomas Backteman to DI.

In a letter to the department of finance, the Swedbank CEO has argued that the existing voluntary commitment, which requires amortization on mortgages in excess of 75 percent of the property value, does not work particularly well.

The bank has thus called for legislation to force banks to act to encourage especially highly-leveraged customers to pay off their loans.

“We thus believe that the way towards a more robust system is via legislation as opposed to self-regulation,” Backteman explained.

In his letter to the finance department, the Swedbank CEO has however stopped short of stipulating an exact level at which amortization would be legally required.

Wolf argued that if nothing is done and Swedish property prices declined by as little as 10 percent then Swedish banks would run into difficulties financing their stocks of mortgage loans.

This would in turn increase the cost of bank borrowing and thus threaten the broader Swedish economy, Wolf argued.

The bank pointed out that Swedish banking culture differs somewhat from the remainder of Europe.

“A normal European mortgage is paid off in 20-25 years. This is a structure we have previously had in Sweden and which we must now return to,” Backteman told Dagens Industri.

The Local/pvs

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Swedish bank’s IT fault puts customer accounts in the red

A technical problem at Sweden's Swedbank on Thursday night gave customers a nasty surprise, with their account balances inexplicably going negative, payments impossible, and Swish payments no longer working.

Swedish bank's IT fault puts customer accounts in the red

By 11.30pm, more than 2,000 Swedbank customers had reported the fault to the site Downdetector, and the problem was still not solved by 17.00pm on Friday. 

“We have an ongoing IT disruption where certain customers see an incorrect balance on their accounts,” a message on the bank’s app read. “The reason is a planned update to our internal systems which went wrong. We apologise, of course, for that and are working as quickly as possible to fix the problem.” 

The Swish payment service has also been affected, with the service, which is owned collectively by Swedish banks, reporting on its site that there was a “technical disruption at Swedbank and Sparbank which might affect Swish payments from these banks”. 

Some Swedbank customers posted their negative account balances on Twitter, expressing shock at the incorrect figures. 

The disruption comes at the worst possible time for many Swedes. Many people are paid on the 25th of the month, meaning this Friday marks the start of the payday weekend. Many will have also scheduled their bill payments for this Friday. 

Marko Saric from Malmö saw his account balance drop by 1.2 million kronor, going half a million kronor into the red. 

“It’s just totally crazy,” he told SVT. “We were going to go out and shop for the weekend. It’s lovely weather and the kids want to go out, but we can’t use our card. We’ve got no cash. Everything is in the bank.” 

“You’re just completely blocked. Colleagues need to make emergency food parcels for you. It’s just crazy that something like this should happen.” 

In its statement, the bank assured customers that their money was “secure”, and that the bank still had the correct information on what their account balance should be. 

“Customers who feel that they have suffered economic damage as a result of the disruption should contact the bank,” the message said.