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Sweden Sees Delay to Stricter Bank Capital Rules Implementation

Sweden won’t be able to implement its stricter capital regulation for banks on time because of delays in the European Union, Financial Markets Minister Peter Norman said.

Sweden, which late last year told the nation’s four largest banks to reach a core Tier 1 capital ratio of risk-weighted assets of 10 percent by January and 12 percent in 2015, is unlikely to be able to implement the first step until the middle of 2013, Norman said today in Stockholm.

“The directive that our own laws will be based on is not finished” and “it’s more and more obvious that we won’t be able to do it on time,” he said. “Realistically it can’t come into force until somewhere around the middle of 2013.”

Sweden’s tighter rules have caused discord between the EU and Sweden, with Finance Minister Anders Borg fighting plans to make the European Central Bank the region’s top regulator amid concerns it would undermine freedom to set more rigorous capital requirements than those targeted elsewhere. While the rules have been delayed, Svenska Handelsbanken AB (SHBA), Swedbank AB (SWEDA) and SEB AB already meet the 2015 threshold of 12 percent. Nordea Bank AB’s capital ratio is just below.

“My message to the banks is that I assume that they will remain at these levels or even raise them knowing” that “the 2015 threshold remains” at 12 percent, Norman said.

Handelsbanken had a core Tier 1 capital ratio of 16.8 percent at the end of the second quarter, while Swedbank’s and SEB’s stood at 16.6 percent and 15.3 percent, respectively. Nordea Bank AB (NDA)’s core Tier 1 ratio was 11.8 percent.

Sweden’s capital rules are more stringent than the Basel Committee on Banking Supervision’s minimum of 7 percent, which takes effect by 2019. The European Banking Authority has a temporary target of 9 percent for some lenders.

To contact the reporters on this story: Niklas Magnusson in Hamburg at nmagnusson1@bloomberg.net; Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman in Stockholm at jbergman@bloomberg.net

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