UPDATE 1-SEB reclassifies securities to reduce volatility

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STOCKHOLM, Nov 10 (Reuters) - Swedish bank SEB (SEBa.ST) said on Monday it was reclassifying 99 billion crowns ($12.77 billion) worth of fixed-income securities as loans and receivables to reduce volatility in its income.

SEB said in a statement the reclassification of the securities, effective as of July 1, increased its third-quarter operating earnings by 516 million crowns to 2.53 billion.

"All assets are of high quality and performing as regards amortisations and interest payments," the company said.

"Thus, the classification as loans and receivables better reflects the purpose of these holdings and avoids further short-term mark-to-market volatility in income and equity."

The bank, which issued its third-quarter results in late October, said it planned to hold the securities for the foreseeable future or until they matured.

"The reclassification has a limited effect on risk-weighted assets and no material effects on the tier 1 and total capital ratios," it added. (Editing by Will Waterman)