Costly Bank Loans in Sweden to Drive Bond Sales, Swedbank Says

Swedbank AB, which is doing more corporate bond issues in the Nordic region this year than any other bank, says the share of Swedish companies’ debt market funding will more than double as higher capital requirements make bank loans more expensive.

About 15 percent of corporate funding in the Nordic region now comes from the capital markets, Elisabeth Beskow, co-head of Swedbank’s Large Corporates & Institutions division, said in an interview. That figure will climb in Sweden to as high as 40 percent in coming years “with the new capital requirements that the banks face,” she said.

“It will become more expensive to borrow from banks,” Beskow said Wednesday.

Sweden’s banks face higher capital requirements after the Financial Supervisory Authority said last month lenders must assume more frequent economic downturns when they estimate potential losses from corporate lending. The changes are part of a broader regulatory effort to ensure banks don’t minimize risks to drive down capital needs.

Beskow said she’s already seeing signs of a pickup in debt issuance.

Swedbank has arranged more bond deals this year -- 184 -- than any other bank operating in the Nordic region, according to data compiled by Bloomberg. The lender ranks fourth in total value, after Danske Bank A/S, JPMorgan Chase & Co. and Nordea Bank AB. In its latest survey, TNS Sifo Prospera ranked Swedbank first in overall performance of debt capital markets investment-grade issuers in the Nordic region.

“When looking at our deal flow right now, I have a much more positive feeling in the second quarter than what I had ahead of the first quarter,” Beskow said. A shift in Sweden to capital markets will put the country more in line with practices in the U.S., where loans account for just about half of corporate funding, she said.

Beskow was named co-head of Swedbank’s large corporates and institutions unit, along with Ola Laurin, in April by newly appointed Chief Executive Officer Birgitte Bonnesen. Former CEO Michael Wolf was ousted in February amid allegations of insider trading, for which he was exonerated, and board dissatisfaction with the bank’s performance.

Swedbank hasn’t been “sufficient” in addressing the complex needs of Swedish and Baltic medium-sized companies, Beskow said. The bank plans to correct that by offering more services developed by increased cooperation among different business units, she said.

“We will try to do more business with those customers, and show that we have the full product range for those clients, so they don’t have to go elsewhere,” Beskow said. “We will be a full-service provider, also in more advanced financial services.”

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