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STOCKHOLM May 8 Sweden's financial watchdog
outlined its "road map" for building up resilience among banks
ahead of any future crisis, confirming it would introduce a
systemic risk buffer and force banks to put more capital aside
to cover risks in their mortgage portfolios.
The Financial Supervisory Authority (FSA) said on Thursday
it would give details of a planned "countercyclical" capital
buffer for banks in the autumn.
"On the whole, the information provided today describes a
clear tightening of capital requirements for Swedish banks," the
FSA said in a statement.
The watchdog said Swedbank, Nordea, SEB
and Handelsbanken will have to hold a
systemic risk buffer of 3 percent in core Tier 1 capital from
the start of 2015, along with a further 2 percent as part of the
so-called Pillar 2 requirement of new international rules.
"It's another tightening of the screw," said Nick Davey, an
analyst at UBS. "The new news is the additional 2 percentage
points capital requirement for Pillar 2 risks, and that's
basically in line with what we had laid out as our base case."
Sweden's financial regulator is viewed as one of the
toughest in Europe, but its banks have also benefited from low
funding costs thanks to their low-risk profiles and healthy
Most of them fared well through the financial crisis and
have emerged as among the most profitable in Europe.
Still, fears of a housing bubble have prompted Sweden's
regulator to further tighten rules in the face of rising
property prices throughout the financial crisis. Prices have
almost tripled in the last 20 years.
Swedish households are also among the most heavily indebted
in Europe, with debts of around 174 percent of disposable
income, prompting the central bank to keep monetary policy
relatively tight, despite low inflation pressure.
Sweden has taken several measures to cool the housing
market. The financial watchdog introduced a cap on mortgage
borrowing of 85 percent of the value of a home in 2010.
It confirmed on Thursday that the mortgage risk-weight floor
- regulating how much money a bank has to set aside for mortgage
lending - will rise to 25 percent from 15 percent, bringing it
more in line with the rest of Europe.
(Reporting by Johan Ahlander and Mia Shanley; Editing by David