A disorderly and abrupt increase in international market rates could lead to significantly higher term and equity risk premia. This is the conclusion of an analysis conducted by FI.
FI presents its view on the specific requirements for liquidity coverage ratios in individual currencies. The authority also provides its interpretation of the diversification requirement on the liquidity buffer’s composition for Swedish covered bonds. FI will apply this approach to its supervision of banks belonging to Supervision Categories 1 and 2 on 1 October 2019.
The European Systemic Risk Board (ESRB) has issued warnings to five EEA countries and recommendations to six EU countries for medium-term vulnerabilities in their respective residential real estate sectors. Sweden is one of the countries that receives a recommendation. The recommendation suggests appropriate actions to address the identified vulnerabilities. In 2016, the ESRB issued a warning to Sweden regarding risks in the residential real estate sector.
FI’s Director General spoke today at the Finansdagen conference in Stockholm.
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q2 2019.
Finansinspektionen (FI) decided on 5 July not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which will be applied as of 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.04 per cent.
Both the global and the Swedish economies appear to be slowing down. Low interest rates – which have resulted in high risk-taking and rising asset prices – are expected to remain low for a prolonged period of time. Resilience in the Swedish financial system is satisfactory in general. However, even if the banks’ resilience is satisfactory overall, FI makes the assessment that they need more capital to cover the risks in their lending to commercial real estate firms.
The commercial real estate market plays a key role in financial stability. The financial position of commercial firms is currently satisfactory, but many firms are vulnerable to higher interest rates and weaker economic growth.
FI has analysed the commercial real estate market and makes the assessment that it is vulnerable to shocks.
Finansinspektionen (FI) considers the firms in the Swedish financial system to have sufficient resilience for withstanding a weaker economy. However, commercial real estate firms are vulnerable to shocks. FI therefore makes the assessment that the banks need more capital for these exposures. This is one of the conclusions in FI’s first stability report for the year, which is being presented today.
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q1 2019.
Finansinspektionen (FI) decided on 6 May not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which will be applied as of 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.15 per cent.
FI’s Director General participated in the seminar Evolution of Mortgage Finance arranged by Stabelo for a broad group of institutional investors.
High debt can mean risks for individual households, banks, financial stability and macroeconomic development. The mortgage survey serves as an important basis for the assessment of the risks associated with household debt.
Under FI's stricter amortisation requirement, which went into effect on 1 March 2018, new mortgagors with debt in excess of 450 per cent of gross income must amortise 1 percentage point more of their loan per year in addition to the existing requirement. The objective of the stricter requirement is to strengthen resilience of households by decreasing the number of mortgagors who have high debt in relation to their income.
New mortgagors are amortising, borrowing less and buying less expensive homes, but many still have high debt. These are FI’s conclusions in this year’s mortgage report. FI is also publishing an FI Analysis that shows the stricter amortisation requirement has reduced the percentage of borrowers with high debt in relation to their income.
This FI Analysis describes how Swedish covered bonds function, how the regulation governing the cover pool is designed and how the cover pool is affected by a fall in house prices.
Erik Thedéen, Director General of Finansinspektionen, took part in a seminar on “The Banking Union from a Nordic-Baltic perspective” arranged today by SIEPS and the Swedish Government’s “Committee on Potential Participation in the European Banking Union”.
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to the supervisory categories 1 and 2 as of the end of the fourth quarter 2018.
In Sweden, the traditional bank-based financing model for issuing and financing mortgages is currently being supplemented by models where mortgages are being financed in new ways, e.g. alternative investment funds (AIF).
Finansinspektionen (FI) decided on 30 January not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which will be applied as of 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.29 per cent.
A new report from Finansinspektionen and the Swedish National Debt Office shows that the value of an implicit state guarantee for the major Swedish banks has decreased since the financial crisis in 2008–2009. This decrease is due to higher capital and liquidity requirements on the banks, a new regulation for managing banks in crisis and improved market conditions.
Finansinspektionen (FI) has conducted a survey of the management of market risks by savings banks and of their holdings in financial assets. FI’s assessment is that the majority of savings banks are managing their market risks in an acceptable manner.
FI is continuing to analyse the event that occurred in September 2018 when a member on the commodity market was declared in default. We describe here several of the issues that FI is currently analysing. We are also publishing a discussion paper that FI wrote to contribute to an ongoing international discussion on auctions as a method to manage a default in a central counterparty.
Thedéen discussed the impact of high household debt on financial stability and sustainable economic growth as well as the role of macroprudential policy at the 7th FIN-FSA conference on EU Regulation and Supervision.
Low interest rates have contributed to high risk-taking, rising asset prices and increasing debt. Higher interest rates in the next few years could reduce risk-taking and thus dampen the build-up of risk. However, unexpectedly large interest rate fluctuations and uncertain global developments could also test the financial sector’s resilience. These are some of the conclusions Finansinspektionen (FI) draws in this year’s second report on the stability in the financial system. The report will be presented at a press conference today.
The economy continues to be strong, both in Sweden and globally, but it is now showing signs of a slow-down. Interest rates have been low for a long period of time, which has led to high risk-taking and rising asset prices. As a result, the risks in the financial system are elevated. The resilience in the Swedish financial system is satisfactory in general but continued high growth in debt fuelled by lending and investments related to residential property and commercial real estate require monitoring.
Despite the positive progression over the past few weeks, there is still some uncertainty surrounding Brexit. FI has previously identified the limited access to clearing services as one of the consequences of Brexit that could have a major impact on Swedish firms. The European Commission’s communication that it will take action to manage risks to financial stability that are associated with clearing is therefore welcomed. At the same time, though, a hard Brexit could create other types of frictions that affect Swedish firms. It is therefore of utmost importance that Swedish firms continue to prepare for Brexit.
Affordable housing and household indebtedness is increasingly the focus of the public debate in many countries. Erik Thedéen participated in a plenary panel together with representatives from Australia, Canada and Ireland to discuss what can be done to manage systemic risks and maintain healthy housing markets.