Vulnerabilities in the Swedish banking system

This page presents comprehensive information with regard to vulnerabilities and risks in the Swedish banking system that has been published on the Riksbank's website.

The Riksbank considers there to be vulnerabilities and risks in the Swedish banking system. The Swedish banking system is large in relation to the Swedish economy and in a European perspective. The Swedish banking sector is also strongly concentrated. The four major banks, Handelsbanken, Nordea, SEB and Swedbank, are responsible for around 70 per cent of lending in Sweden and approximately the same share of deposits. The major banks also have significant exposures to each other in that they own each other's securities, making them closely interconnected.

In addition, the major banks have large amounts of loans with homes and other types of property as collateral on their balance sheets. This means that they have significant exposures towards the housing market and the commercial property market. Shocks on the housing market can thus affect the banks.

The banking system's structure therefore implies that problems in one bank can quickly spread to other banks and markets, and damage confidence in the entire financial system.

The major banks are exposed to liquidity risks

The Swedish banks are exposed to both short-term and structural liquidity risks. A short-term liquidity risk implies that a bank would be unable to repay the liabilities that mature in the near term if it were to have difficulty renewing its funding. Structural liquidity risks are instead posed by the imbalances between the maturities of banks' assets and the maturities of their liabilities.

Banks' capital levels

Given the structural vulnerabilities and liquidity risks in the Swedish banking system, it is important for banks to hold a sufficient amount of capital. According to the Riksbank, Finansinspektionen should introduce a leverage ratio requirement of 5 per cent for the major Swedish banks as from January 2018, as a complement to the risk-weighted capital requirements. New calculations also indicate that a higher requirement than 5 per cent may be socio-economically profitable.

Updated 01/02/2018