Swedish Financial Supervisory Authority (Finansinspektionen): Financially Stronger Banks Well Equipped For Increased Uncertainty

Swedish banks are only marginally exposed to the assets that are affected most by this fall's market turbulence. Rather, the increased risks are coupled to increased lending in the Baltic states. This is the finding of FI's report The stability of the Swedish financial sector, which will be submitted to the Government today.

The turbulence on the world's financial markets has led to increased uncertainty. Major losses now need to be absorbed by banks around the world. In the long run, this can mean that lending to the real economy will slow and the business cycle will be affected negatively.

FI concludes that Swedish banks and pension companies are financially stronger than they have been in many years. For the banks, risks for losses have increased in their lending in the Baltic states. Risks for large losses in mortgage lending have also increased, although from a very low level. At the same time, new risk-sensitive rules for capital requirements have improved capital planning and risk management.

Pension companies have the ability to meet their guaranteed commitments to customers, and their resistance to various risks was strengthened in the past year, even after the recent market turbulence.

Summary: Stability of the Swedish financial sector (2007:16)