January 19, 2018 / 9:10 AM / 2 years ago

UPDATE 1-Swedish bank SEB shareholder equity cut by new accounting rules

(Adds background, details)

STOCKHOLM, Jan 19 (Reuters) - SEB’s shareholder equity will fall by 8.2 billion Swedish crowns ($1.02 billion), the Swedish bank said on Friday, mostly due to new accounting rules, but also as a result of a 1.9 billion crown hit to its 2017 fourth quarter results.

Shareholders’ equity is a company’s total assets minus its total liabilities, and is the amount that would be returned to shareholders if its assets were liquidated and all debts repaid.

The adoption of new accounting principles, called IFRS 9 and IFRS 15, which come into effect at the start of 2018, will lead to a 6.0 billion crown reduction, SEB said in a statement.

Meanwhile, transformation costs from SEB’s German business and IT write-downs totalling 1.9 billion crowns before tax and 1.7 billion crowns after tax in the fourth quarter 2017, will also have an adverse impact on shareholder equity, SEB added.

“The business outlook remains unchanged and SEB remains committed to the financial targets including a capital buffer of around 150 basis points, and the cost cap of 22 billion crowns for 2018,” SEB said in a statement.

SEB shares were down 2.5 percent at 0844 GMT, underperforming the European banking index, which was down 0.2 percent.

The writedowns will lead to a decrease of the capital buffer by about 0.5 percentage point, the bank said. ($1 = 8.0149 Swedish crowns) (Reporting by Johan Ahlander; Editing by Edmund Blair and Alexander Smith)

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