2011-10-27
PRESS RELEASE
The EU has agreed on a number of measures to strengthen the European banking sector. A requirement is being implemented that the core Tier 1 capital ratio should be at least 9 percent after the revaluation of sovereign exposures. Affected banks must fulfil this requirement no later than 30 June 2012.
Finansinspektionen (FI) views the Council's measures as a positive step toward resolving the problems currently facing the European banking sector as well as toward the prevention of the spread of market uncertainty.
The Swedish banks are some of the most well-capitalised banks within Europe and have very little exposure to states with weakened public finances. Therefore, they will only be marginally affected by any write-downs to these holdings.
However, EBA has opted to measure the capital ratio using the transitional rules from Basel 1, which is of considerable importance for several of the Swedish banks since assets with relatively low risk, e.g. Swedish mortgages, are assigned a significantly higher risk weight in EBA’s measurement than in the future Basel 3 regulations.
The difference between the transitional rules and Basel 3 has the greatest effect on Handelsbanken and Swedbank, which have the largest share of mortgages and in general have assets with low risk. As a result, these two banks will not reach EBA's threshold of 9 percent when applying the transitional rules. According to EBA's preliminary calculations, Handelsbanken has a deficit of SEK 9.7 billion and Swedbank a deficit of SEK 2.9 billion.
However, it is FI's assessment that all of four large Swedish banks are well-capitalised, even when taking an extremely conservative approach to the risks in their balance sheets.
