Swedish Banks results in the EU-wide stress test
The four major Swedish banks – Nordea, SEB, Svenska Handelsbanken and Swedbank – all pass the CEBS (
Committee of European Banking Supervisors) stress test with a comfortable margin. This is Finansinspektionen’s assessment of the outcome of the CEBS EU-wide stress test conducted on 91 banks from 20 EU-countries. The stress test is designed to gauge the resilience of banks in a hypothetical scenario over two years. The scenario assumes a weak economic development, higher interest rates, falling stock markets and substantial losses on holdings of government debt. The Swedish banks show a tier-1 ratio in the range of 8.9-10.3% at the end of the stress test scenario, well above the regulatory minimum level of 4%.
The CEBS stress test does not change FI’s previous assessment that the major Swedish banks are well capitalised. According to FI, the major banks have enough capital to weather even more severe scenarios than what was assumed in this stress test. Thus, there is currently no need for any of the major banks to strengthen their capitalisation, from a regulatory perspective. However, in extreme scenarios the market may require even higher capital ratios, which requires the banks to have capital contingency plans even for highly unlikely scenarios. A capital contingency plan describes concrete and realistic measures that can be taken to strengthen capital within a relatively short time-frame. It is FI’s assessment that Swedish banks today have such contingency plans readily available.
