* Says should not have strict amortisation rules
* Norman sees no problem with bank dividends
(Adds quotes, background, detail)
By Simon Johnson and Johan Sennero
KARLSTAD, Sweden, March 15 Sweden's financial
markets minister played down worries about high levels of
household debt in Scandinavia's biggest economy on Friday and
said that, unlike the central bank, he did not favour banning
Swedish households are among the most heavily indebted in
Europe with household debt at around 170 percent of disposable
income, up from about 100 percent in 2000, and that has been a
factor keeping the central bank from cutting interest rates
further after the economy slowed last year.
"It (the debt level) isn't alarming. It is high. Sweden and
households themselves would be in better shape if it was a bit
lower," Peter Norman told Reuters.
Central bank Governor Stefan Ingves said earlier this month
that people should be made to amortise debt by regularly
repaying the principal on their mortgages not just the interest.
Norman however said he did not believe Sweden should have
a strict rule that mortgage borrowers make monthly repayments,
or amortise, to bring down the size of their loans rather than
just paying the interest.
He said amortisation of loans was a good thing, but there
were periods in life, such as unemployment, when paying off
loans was not possible.
"However, I do want to encourage a change in behaviour," he
said. If amortisation did not increase, Norman said the
government would have to consider other measures.
The government, not the central bank, would decide on
whether to change the mortgage rule.
While mortgage rules in Sweden are relatively loose compared
with other countries, the country has taken a tougher line with
its banks than most in Europe over capital requirements.
The government has also criticised banks for wanting to
return capital above the regulatory minimum to shareholders,
saying the economic situation did not justify such
Norman said it remained important for banks to have capital
levels above the regulatory requirements.
"I think it is suitable and good that they have more
capital, and that is the case today," he said.
"They (the banks) have to meet that benchmark right through
the business cycle. Things go up and down and they will have
credit losses some day."
However, he said that recent moves to increase shareholder
payouts by Sweden's big banks were not a problem.
"Even with the dividend levels currently, the four big banks
are building capital," he said.
Swedish banks are among the best capitalised in Europe. Last
year, Swedbank raised its payout ratio to 75 percent of profit
from 50 percent. SEB tweaked its payout target upward and
Nordea raised its dividend to 0.34 euros per share from 0.26
euros the previous year.
Nordea, in which the state has a 13.5 percent
stake, also got a mandate this week from shareholders to buy
(Reporting by Simon Johnson and Johan Sennero, editing by
Patrick Lannin and Susan Fenton)