Swe­den banks to make lower losses due to im­prov­ing con­di­tions

The Pak Banker - - Front Page -

STOCK­HOLM: Swedish banks will make lower losses than ex­pected in the next few years due to im­prov­ing eco­nomic con­di­tions, but they could face fi­nanc­ing prob­lems if do­mes­tic house prices fall, the cen­tral bank said on Thurs­day.

This com­pared with a pre­vi­ous es­ti­mate, is­sued in June, of 61 bil­lion crowns of losses in the 2010 to 2012 pe­riod.

"The re­cov­ery in the Swedish econ­omy is con­tribut­ing to a con­tin­ued de­cline in the banks' loan losses," the bank said in its twice-yearly fi­nan­cial sta­bil­ity re­port. "At the same time, ac­cess to mar­ket fund­ing has im­proved. The Swedish banks are well cap­i­talised in an in­ter­na­tional com­par­i­son, and their re­silience to un­ex­pected events is thus good."

The Riks­bank noted that banks re­mained sen­si­tive to fi­nan­cial mar­ket dis­rup­tions and should there­fore main­tain or raise cap­i­tal lev­els and con­tinue to ex­tend fund­ing ma­tu­ri­ties. The sit­u­a­tion in Lithua­nia, Es­to­nia and Latvia --where Scan­di­na­vian banks have in­vested heav­ily among the worst vic­tims of the fi­nan­cial cri­sis --has im­proved in re­cent quar­ters, eas­ing pres­sure on the banks. But con­cerns linger that soar­ing house prices and surg­ing credit growth to house­holds in Swe­den could un­der­mine len­ders fur­ther ahead.

The pub­lic debt woes in the euro zone and the re­sult­ing mar­ket turmoil has also caused some wor­ries re­gard­ing Swedish banks' ac­cess to fund­ing in in­ter­na­tional fi­nan­cial mar­kets should the sit­u­a­tion de­te­ri­o­rate fur­ther. -PB News

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