Sweden’s largest banks were the biggest decliners on the Stockholm OMX30 Index after Sweden’s government said capital buffers for Swedbank AB (SWEDA), Nordea Bank AB (NDA), Svenska Handelsbanken AB (SHBA) and SEB AB may need to be raised.
Handelsbanken fell as much as 2.2 percent to 285 kronor while Swedbank lost as much as 2 percent to 153.60 kronor, their lowest intraday prices since July 19. Nordea slid as much as 2.5 percent to 79.90 kronor and SEB fell as much as 2 percent to 69.60 kronor.
Swedish Financial Markets Minister Peter Norman said today that Sweden’s banks, already subject to some of the world’s toughest capital rules, may need bigger buffers. While it’s not yet clear how that will be done, the government may raise the capital requirements for the banks, Norman said.
Sweden’s biggest banks already face stricter capital rules than standards targeted elsewhere and must hold at least 10 percent core Tier 1 capital of their risk-weighted assets this year. That requirement rises to no less than 12 percent by 2015. In contrast, the Basel Committee on Banking Supervision sets a 7 percent minimum from 2019.
Norman today proposed a raft of measures aimed at strengthening bank industry stability in the largest Nordic economy. Steps include giving the Financial Supervisory Authority more tools and putting the regulator in charge of oversight, according to an e-mailed statement.
“In addition to these measures to form a stricter framework and tougher rules for the banks, the development and the risks that are tied to it means it may be necessary to sharpen the requirements on the financial sector further in the future,” Norman said. “That could, for example, include higher capital rules for banks.”
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