April 30, 2012 / 10:46 AM / 8 years ago

CORRECTED-Sweden to fight for own tighter bank rules at EU meeting

(In para 5 corrects to “without” from “with”)

STOCKHOLM, April 30 (Reuters) - Sweden is to insist on its right to impose tighter bank capital rules at a meeting of European Union finance ministers this week, the Finance Ministry said on Monday.

Sweden’s bank system, with assets four times the size of economic output, is the third biggest relative to gross domestic product in Europe.

The country plans to make banks hike core capital to higher levels than in the new Basel III rules on bank buffers.

“The government considers that member states should have bigger possibilities to take the measures they think are necessary to secure financial stability at national level than the current proposal sets out,” the Finance Ministry said.

It said the current draft plan meant Sweden would not be able to carry through its plans for higher capital requirements without approval from the European Commission.

“The government thinks that is unacceptable,” the ministry added in a commentary on the agenda for the May 2 European Union finance ministers meeting.

Though the four main Swedish banks - Nordea, SEB, Handelsbanken and Swedbank - emerged from the 2008-2009 global liquidity crunch in relatively good shape, they had to take on losses from the crisis-hit Baltic market.

The government also took part in a rights issue for the biggest Nordic bank Nordea, while the central bank supplied liquidity to the whole system when funding markets froze.

The crisis reinforced official worries about financial sector vulnerabilities, leading to the desire to go beyond the rest of Europe in tightening capital rules.

Only Switzerland and Britain have bigger bank systems than Sweden relative to GDP, the Finance Ministry has said.

In November last year the government proposed banks should have core Tier one capital of 12 percent by 2015, much higher than new Basel III rules’ minimum of 7 percent by 2019. (Reporting by Patrick Lannin; Editing by Mark Potter)

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