December 7, 2017 / 4:40 PM / a year ago

Swedish FSA says does not intend to let capital requirements rise "mechanically" due to Basel III rules

STOCKHOLM, Dec 7 (Reuters) - The Swedish financial watchdog does not intend to let capital requirements for Swedish banks rise “mechanically” due to the new Basel III framework but cannot rule out that capital levels will have to come up, it said on Thursday.

Swedish banks use internal risk-weighted models to calculate their capital levels. Under the new Basel III agreement the floor for such models will be 72.5 percent in 2027. The Swedish Financial Supervisory Authority (FSA) has currently set a 25 percent floor for mortgages.

“The FSA does not intend to mechanically increase capital requirements as an effect of new Basel standards,” it said in a statement.

“However, the FSA still sees that large capital buffers for banks are central to financial stability and therefore it can not be ruled out that the capital levels in Swedish banks may need to increase when the agreement is implemented.” (Reporting by Johan Ahlander; editing by Johannes Hellstrom)

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