STOCKHOLM (Reuters) - An internal document at Sweden’s financial watchdog shows Nordea NDA.ST underestimated risks in its corporate lending and could need as much as 80 billion Swedish crowns ($9.70 billion) in new capital, daily newspaper Svenska Dagbladet reported on Monday.
A spokesman at Nordea said the Nordic region’s biggest bank had more than fulfilled capital requirements in the financial watchdog’s latest assessment, delivered in March, and that this had occurred after the authority’s document was said to have been drafted.
Nordea spokesman Rodney Alfven said the bank would provide further comment on the report later. A spokesman at the financial watchdog declined to offer any immediate comment.
Svenska Dagbladet, citing sources with knowledge of the document, said it had been produced several months ago by an analyst at Sweden’s Financial Supervisory Authority and it warned that Nordea had underestimated risks in its corporate lending for an extended period.
Lower risks associated with lending, which are based on historic risk assessments, allow banks to hold less capital to account for these risks.
The document stated that based on the situation at the end of last year, Nordea would have needed to boost its capital by between 50 billion and 80 billion crowns to be in line with regulatory requirements, the paper reported.
Nordea reported in April that its common equity tier 1 capital ratio had risen to 16.7 percent at the end of the first quarter, up from 15.6 percent a year ago. The bank also said it expected to operate at a ratio of around 16.5 percent this year.
Reporting by Niklas Pollard; Editing by Leslie Adler