A stable, well-functioning financial market for allA stable, well-functioning financial market for allThe Financial Stability Council
The Financial Stability Council is a forum for representatives from the Government, FI, the Swedish National Debt Office and the Riksbank to regularly discuss matters pertaining to financial stability, the need for measures to counteract the build-up of financial imbalances and, in the event of a financial crisis, the need for measures to address such a situation.
2020
Financial firms must be restrictive with dividends until September 2021
In light of the economic uncertainty caused by the ongoing coronavirus pandemic, FI expects banks, including credit institutions and other financial firms such as insurance companies, to be restrictive with dividends and share buybacks until 30 September 2021. During this period, total dividends from and buybacks by the banks should not exceed 25 per cent of their aggregate net earnings for the two financial years 2019–2020.
Macro-based stress test of Swedish banks: results and methodology, autumn 2020
Finansinspektionen (FI) presents in this memorandum a stress test of the Swedish banks that we conducted in the autumn of 2020. The results indicate that the major banks have significant resilience to the credit losses that could arise and also a capacity to maintain the supply of credit.
Stability in the Financial System (2020:2)
The pandemic has triggered a deep economic recession in many countries, even if a slight recovery has begun. Extensive support measures have mitigated the economic impact and reduced the uncertainty on the financial markets. During the autumn, infection rates have once again begun to increase and several countries have introduced new restrictions, which will dampen the economic recovery, even though it is uncertain to which extent.
Dampened recovery can weaken financial stability
An increase in the spread of the coronavirus will dampen the recovery in European economies and, in the long run, this could impact financial stability, writes Finansinspektionen (FI) in this year’s second stability report, which will be published today.
Capital requirements of Swedish banks as of Q3 2020
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q3 2020.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 24 November not to change the countercyclical buffer rate. The buffer rate of 0 per cent, which was applied starting on 16 March 2020, shall thus continue to apply. The countercyclical buffer guide is set at 1.7 per cent.
FI Analysis 26: Macro-based credit loss model for major Swedish banks
Large credit losses can result in otherwise profitable banks reporting a loss. This FI Analysis describes a methodology for estimating how large credit losses can be in a stressed macroeconomic scenario.
FI has decided on a change in the application of banks’ capital requirements
FI has decided to change the application of capital requirements for Swedish banks in order to adapt to the EU’s so-called banking package.
European Commission approves extension of the risk weight floor for Swedish mortgages
The European Commission has announced that it does not intend to object to FI's intention to extend the current risk weight floor for Swedish mortgages. This means that FI may implement the measure.
FI Analysis 25: Interest rate deductions and households’ loans
The tax rebate for interest expenses – the interest deduction – means that households borrow more, and can and want to pay more for homes. This means that the households experience an increase in both their liabilities and assets, which in turn could have an impact on the stability of the financial system. In this FI Analysis, we calculate the impact of a change to the interest deduction. The reason for this analysis is the direct link between interest deductions and households’ loans.
FI Analysis 24: Stress test of bank lending to commercial real estate firms
Commercial real estate firms are sensitive to changes in interest rate expenses and income. Following a shock, vulnerable commercial real estate firms could lead to credit losses for the banks.
Bank dividends not appropriate until the situation has stabilised
As the crisis unrolled this past spring in full force, it required fast and extraordinary measures. For example, FI lowered the countercyclical buffer requirement for the banks and encouraged them at the same time to postpone their dividend payments until the situation had become clearer. During the autumn, FI repeated its message to the banks to not make any dividend payments in 2020.
Henrik Braconier's speech at SNS/SHOF Finance Panel: Corporate Finance in a Low Interest Rate Environment
Henrik Braconier, Chief Economist at FI, spoke on risks related to low interest rates at SNS/SHOF’s Finance Panel: Corporate Finance in a Low Interest Rate Environment.
FI Analysis 23: Can the bond market dampen the credit cycle?
The access of non-financial firms to credit is central for financial stability, particularly during financial crises. In recent years, the market for corporate bonds has grown steadily and currently plays an important role in firms’ financing. This analysis shows that it has not been easier to issue corporate bonds in Swedish krona during financial crises than to take a bank loan. This pattern deviates from previous research on the USA and the euro zone.
Erik Thedéen's speech at Driving Global Standards on Sustainable Finance
Erik Thedéen, Finansinspektionen's Director General and Chair of IOSCO's Task Force on Sustainable Finance made a speech at the conference Driving Global Standards on Sustainable Finance.
FI notifies the EU regarding extension of the existing risk weight floor for Swedish Mortgages
Finansinspektionen has notified the EU Parliament, the Council, the Commission, the European Systemic Risk Board (ESRB) and the European Banking Authority (EBA) that it intends to adopt a decision to extend the current risk weight floor for Swedish Mortgages for a period of one year, in accordance with Article 458 of the CRR.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 9 September not to change the countercyclical buffer rate. The buffer rate of 0 per cent, which was applied starting on 16 March 2020, shall thus continue to apply. The countercyclical buffer guide is set at 1.3 per cent.
Continued grounds for suspension of dividend payments for the rest of the year
Despite positive signals, there is still considerable uncertainty about how the coronavirus pandemic will develop in the next few months in both Sweden and the rest of the world. To ensure the banks’ resilience in a situation that continues to be uncertain, the banks should suspend the payment of dividends to shareholders in 2020. This was the message from Finansinspektionen’s Director General Erik Thedéen at Fastighetsdagen today.
Capital requirements of Swedish banks as of Q2 2020
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q2 2020.
ESRB recommendation on distribution
The COVID-19 pandemic has incurred large human and economic costs and also affected the financial sector. Maintaining own funds in financial institutions is important both for ensuring the resilience of the financial system and supporting banks' lending through this crisis.
FI Supervision 18: Continuity management at banks
Many banks are working actively with continuity management and have implemented key measures to reduce the risk of serious disruptions. At the same time, FI sees a need for the banks to further strengthen their continuity management. FI expects the banks to continue to focus on enhancing the resilience of their critical functions. This supervision report describes the areas where FI would like to see improvements.
Measures stabilised the financial situation
Governments, central banks, and authorities around the world have taken powerful measures to mitigate the economic impact of the coronavirus pandemic. These measures also helped dampen uncertainty on the financial markets. By utilising available buffers and continuing to lend to firms and households, the financial sector can dampen the impact of the crisis. It is also important to remember that the economic crisis is not over, and uncertainty is therefore high, notes Finansinspektionen (FI) in its first stability report of the year.
Stability in the Financial System (2020:1)
The coronavirus pandemic has resulted in an exceptional stress for the real economy. Governments, central banks and supervisory authorities have implemented significant measures to dampen the crisis. This has helped to reduce the uncertainty on the financial markets. But we are in still in the middle of the crisis, and there is considerable uncertainty going forward.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 3 June not to change the countercyclical buffer rate. The buffer rate of 0 per cent, which was applied starting on 16 March 2020, shall thus continue to apply. The countercyclical buffer guide is set at 0.48 per cent.
Global sustainability network NGFS publishes status report and guide for supervisors
The global sustainability network NGFS (Network for Greening the Financial System) is publishing today a report on how banks around the world consider climate-related risks in their lending. The report shows that this is occurring more frequently, but it is at the same time difficult to see which loans constitute a lower risk. This is because, for example, there is no international classification and a shared perception of which assets are “green” and “brown”.
Capital requirements of Swedish banks as of Q1 2020
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q1 2020.
Minutes of the Financial Stability Council Meeting on 16 April
The minutes from the Financial Stability Council’s extraordinary meeting on 16 April have now been published on the Council’s website.
Financial Stability Council convenes an extraordinary meeting on 16 April
On Thursday, 16 April, the Minister for Financial Markets and Housing Per Bolund, Finansinspektionen, the Riksbank, and the Swedish National Debt Office will convene an extraordinary meeting of the Financial Stability Council.
Banks may grant all mortgagors amortisation exemption
Banks will have the possibility of offering all new and existing mortgagors an exemption from the amortisation requirements due to the spread of the coronavirus and its effects on the Swedish economy. The exemption will be in force until the end of June 2021. This enables Finansinspektionen to provide all mortgagors with greater manoeuvrability in these uncertain times.
The Swedish Mortgage Market (2020)
The percentage of new mortgagors with a high level of debt in relation to either their income or the value of the home continues to be high. New mortgagors in 2019 increased their average loan-to-income ratio. The average loan-to-value ratio also increased in 2019 among new mortgagors, thus breaking the trend of falling loan-to-value ratios since 2013.
FI expects banks and credit market companies to stop dividend payments
The spread of the coronavirus has created immediate challenges for society and caused economic disruptions throughout Sweden and the global economy. The forecasts for the Swedish economy are rapidly deteriorating. Therefore, it is important the we safeguard a stable supply of credit to households and firms and maintain good resilience in the system. Banks and credit market companies play a crucial role in this respect.
Loss of income due to corona-virus a cause for exemption from amortisation
Due to the spread of the coronavirus disease (COVID-19), many households and firms may be exposed to economic stress. Even if the crisis is expected to be temporary, its effects can be far-reaching. Banks and borrowers may agree to reduce or suspend amortisation payments temporarily given special grounds. FI considers the loss of income linked to COVID-19 to qualify as special grounds.
Decision by FI’s Board of Directors: the countercyclical buffer rate is lowered to zero
During an extraordinary meeting today, Monday, 16 March, FI’s Board of Directors decided to adopt a countercyclical buffer rate of 0 per cent in accordance with the proposal presented on Friday, 13 March 2020.
FI on liquidity coverage ratios (LCR) for Swedish banks
Given the current circumstances, FI would like to clarify that it will temporarily allow banks to fall below the liquidity coverage ratio (LCR) for individual currencies and total currencies.
Proposed amendment to regulations due to reduction in countercyclical buffer rate
Finansinspektionen proposes that the buffer rate be lowered by 2.5 percentage points and set at 0 per cent.
FI lowers the countercyclical capital buffer to zero
The spread of the coronavirus disease is sending serious economic shocks throughout the world and in Sweden. There is currently widespread uncertainty about the future course of events and how far-reaching the economic impact will be. The economic disruptions and the greater uncertainty are also affecting the financial system. Finansinspektionen (FI) will therefore lower the countercyclical capital buffer requirement for banks from 2.5 per cent to 0 per cent. This corresponds to a reduction of around SEK 45 billion. The buffer is being lowered pre-emptively to ensure a well-functioning supply of credit, which helps firms and households maintain production, consumption and investments.
FI comments on COVID-19 and the banks
The spread of the coronavirus disease (COVID-19) is having a financial impact on firms and households around the world. There is considerable uncertainty about how much the disease will impact the global economy. This economic uncertainty also affects the financial system.
Erik Thedéen: FinTech and cyber threats – what impact do they have on financial stability?
The rate at which household debt is increasing has slowed the past three years. The two amortisation requirements that FI introduced contributed to this change. But the low interest rates entail risks. The debt of commercial real estate companies has been increasing sharply, and the banks have large exposures to the sector. FI decided today to raise the capital requirements for bank loans for commercial real estate. Erik Thedéen also noted that cyber threats are a challenge facing society as a whole, and cooperation is needed on a broad front.
Capital requirements of Swedish banks as of Q4 2019
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q4 2019.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 29 January not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which has applied since 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.18 per cent.
Increased capital requirements on bank loans for commercial real estate
Finansinspektionen (FI) considers there to be elevated risks in the banks’ lending for commercial real estate. The banks should hold more capital for these exposures, which is why FI is raising the capital requirements.
Increased transparency on carbon pricing can strengthen the financial system
FI will explore the possibility of advocating both nationally and internationally increased disclosure of firms’ internal carbon pricing.
2019
Clarification on the impact for Swedish banks from revised Basel standards
In relation to the report published by the European Banking Authority (EBA) in August Finansinspektionen would like to make the following clarification on the impact for Swedish banks of the revised Basel standards. According to Finansinspektionen’s calculation, the increase in tier 1 minimum required capital would be about 30 per cent instead of 53 per cent as shown in the report from the EBA (keeping the assumptions and methodology set by EBA, but taking into account the current Swedish mortgage floor for the current risk-weighted assets).
FI Analysis 20: Fewer home equity withdrawals after amortisation requirements
This FI Analysis shows that households’ tendency to use mortgages for purchases other than buying a home decreased following the amortisation requirements.
FI Analysis 19: Young adults and the housing market
This FI Analysis shows that the the increase in house prices is the primary reason it has become more difficult for young adults to buy a home.
Stability in the Financial System (2019:2)
The low interest rates are expected to remain low for a longer period of time. It could lead to greater risk-taking among various actors, and increased challenges for insurance undertakings.
Capital requirements of Swedish banks as of Q3 2019
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q3 2019.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 24 October not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which has applied since 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.16 per cent.
FI Analysis 18: Swedish risk premia and monetary policy
A disorderly and abrupt increase in international market rates could lead to significantly higher term and equity risk premia. This is the conclusion of an analysis conducted by FI.
Liquidity coverage ratio requirements and diversification of the liquidity buffer
FI presents its view on the specific requirements for liquidity coverage ratios in individual currencies. The authority also provides its interpretation of the diversification requirement on the liquidity buffer’s composition for Swedish covered bonds. FI will apply this approach to its supervision of banks belonging to Supervision Categories 1 and 2 on 1 October 2019.
ESRB recommendation to Sweden for vulnerabilities in the residential real estate sector
The European Systemic Risk Board (ESRB) has issued warnings to five EEA countries and recommendations to six EU countries for medium-term vulnerabilities in their respective residential real estate sectors. Sweden is one of the countries that receives a recommendation. The recommendation suggests appropriate actions to address the identified vulnerabilities. In 2016, the ESRB issued a warning to Sweden regarding risks in the residential real estate sector.
Erik Thedéen: Climate and sustainability in focus at FI
FI’s Director General spoke today at the Finansdagen conference in Stockholm.
Capital requirements of Swedish banks as of Q2 2019
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q2 2019.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 5 July not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which will be applied as of 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.04 per cent.
Banks’ lending to commercial real estate firms requires more capital
Finansinspektionen (FI) considers the firms in the Swedish financial system to have sufficient resilience for withstanding a weaker economy. However, commercial real estate firms are vulnerable to shocks. FI therefore makes the assessment that the banks need more capital for these exposures. This is one of the conclusions in FI’s first stability report for the year, which is being presented today.
The Commercial Real Estate Market and Financial Stability
The commercial real estate market plays a key role in financial stability. The financial position of commercial firms is currently satisfactory, but many firms are vulnerable to higher interest rates and weaker economic growth.
Stability in the Financial System (2019:1)
Both the global and the Swedish economies appear to be slowing down. Low interest rates – which have resulted in high risk-taking and rising asset prices – are expected to remain low for a prolonged period of time. Resilience in the Swedish financial system is satisfactory in general. However, even if the banks’ resilience is satisfactory overall, FI makes the assessment that they need more capital to cover the risks in their lending to commercial real estate firms.
Requirement on IRB models for exposures to commercial real estate
FI has analysed the commercial real estate market and makes the assessment that it is vulnerable to shocks.
Capital requirements of Swedish banks as of Q1 2019
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q1 2019.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 6 May not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which will be applied as of 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.15 per cent.
Erik Thedéen: Diversity on the mortgage market is healthy
FI’s Director General participated in the seminar Evolution of Mortgage Finance arranged by Stabelo for a broad group of institutional investors.
The Swedish Mortgage Market (2019)
High debt can mean risks for individual households, banks, financial stability and macroeconomic development. The mortgage survey serves as an important basis for the assessment of the risks associated with household debt.
FI-analysis 17: Fewer Vulnerable Households after Stricter Amortisation Requirement
Under FI's stricter amortisation requirement, which went into effect on 1 March 2018, new mortgagors with debt in excess of 450 per cent of gross income must amortise 1 percentage point more of their loan per year in addition to the existing requirement. The objective of the stricter requirement is to strengthen resilience of households by decreasing the number of mortgagors who have high debt in relation to their income.
More households are amortising, but households still have high debt
New mortgagors are amortising, borrowing less and buying less expensive homes, but many still have high debt. These are FI’s conclusions in this year’s mortgage report. FI is also publishing an FI Analysis that shows the stricter amortisation requirement has reduced the percentage of borrowers with high debt in relation to their income.
FI Analysis 16: How do covered bonds function?
This FI Analysis describes how Swedish covered bonds function, how the regulation governing the cover pool is designed and how the cover pool is affected by a fall in house prices.
Erik Thedéen: Swedish perspectives on the Banking Union
Erik Thedéen, Director General of Finansinspektionen, took part in a seminar on “The Banking Union from a Nordic-Baltic perspective” arranged today by SIEPS and the Swedish Government’s “Committee on Potential Participation in the European Banking Union”.
Capital requirements of Swedish banks as of the fourth quarter 2018
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to the supervisory categories 1 and 2 as of the end of the fourth quarter 2018.
FI’s View on Preconditions for Mortgage-Based Business Activities
In Sweden, the traditional bank-based financing model for issuing and financing mortgages is currently being supplemented by models where mortgages are being financed in new ways, e.g. alternative investment funds (AIF).
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 30 January not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which will be applied as of 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.29 per cent.
FI Analysis 15: Do banks still benefit from an expectation of an implicit state guarantee?
A new report from Finansinspektionen and the Swedish National Debt Office shows that the value of an implicit state guarantee for the major Swedish banks has decreased since the financial crisis in 2008–2009. This decrease is due to higher capital and liquidity requirements on the banks, a new regulation for managing banks in crisis and improved market conditions.
How FI will continue to handle the event where a member was declared in default on the commodity market
FI is continuing to analyse the event that occurred in September 2018 when a member on the commodity market was declared in default. We describe here several of the issues that FI is currently analysing. We are also publishing a discussion paper that FI wrote to contribute to an ongoing international discussion on auctions as a method to manage a default in a central counterparty.
2018
Erik Thedéen: Household Debt and the Role of Macroprudential Policy
Thedéen discussed the impact of high household debt on financial stability and sustainable economic growth as well as the role of macroprudential policy at the 7th FIN-FSA conference on EU Regulation and Supervision.
Higher interest rates test resilience
Low interest rates have contributed to high risk-taking, rising asset prices and increasing debt. Higher interest rates in the next few years could reduce risk-taking and thus dampen the build-up of risk. However, unexpectedly large interest rate fluctuations and uncertain global developments could also test the financial sector’s resilience. These are some of the conclusions Finansinspektionen (FI) draws in this year’s second report on the stability in the financial system. The report will be presented at a press conference today.
Stability in the Financial System (2018:2)
The economy continues to be strong, both in Sweden and globally, but it is now showing signs of a slow-down. Interest rates have been low for a long period of time, which has led to high risk-taking and rising asset prices. As a result, the risks in the financial system are elevated. The resilience in the Swedish financial system is satisfactory in general but continued high growth in debt fuelled by lending and investments related to residential property and commercial real estate require monitoring.
Klas Granlund: Brexit, positive progression not a reason to stop preparations
Despite the positive progression over the past few weeks, there is still some uncertainty surrounding Brexit. FI has previously identified the limited access to clearing services as one of the consequences of Brexit that could have a major impact on Swedish firms. The European Commission’s communication that it will take action to manage risks to financial stability that are associated with clearing is therefore welcomed. At the same time, though, a hard Brexit could create other types of frictions that affect Swedish firms. It is therefore of utmost importance that Swedish firms continue to prepare for Brexit.
Erik Thedéen: Macroprudential policy and healthy housing markets
Affordable housing and household indebtedness is increasingly the focus of the public debate in many countries. Erik Thedéen participated in a plenary panel together with representatives from Australia, Canada and Ireland to discuss what can be done to manage systemic risks and maintain healthy housing markets.
Capital requirements of Swedish banks as of Q3 2018
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q3 2018.
Biennial Review of the Systemic Risk Buffer
As outlined in the capital requirements directive, FI must review the systemicrisk buffer on an biennial basis. FI has reviewed the arguments originally setout to support a SRB buffer level of 3 % at consolidated level for the major banking groups and finds the arguments to still hold today for the three remaining major banking groups, following Nordea’s re-domicile.
Work with sustainability is progressing – but there is still much to be done
FI is publishing today three reports on sustainability. The reports show that the work with sustainability is progressing on several fronts and that the industry’s own initiatives, where relevant, are working. But there is still a lot of work left to be done. FI is also publishing a follow-up report for the Government on FI's work with sustainability-related matters in 2018.
Finansinspektionen’s work in 2018 to contribute to sustainable development
FI has conducted a number of supervision activities related to sustainability at the same time as the organisation has been partly restructured and received additional resources. During the year, FI's work has focused on integrating sustainability-related matters into its ongoing supervision, a project that will continue and be intensified.
Major Swedish banks show resilience in EU stress test
The major Swedish banks are resilient and have the ability to withstand a sharp deterioration in the market, according to the stress test conducted by the European Banking Authority (EBA).
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 31 October not to change the countercyclical buffer rate. The buffer rate of 2.5 per cent, which will be applied as of 19 September 2019, shall thus continue to apply. The countercyclical buffer guide is set at 0.41 per cent.
FI’s Use of Macroprudential Tools
Household debt is not primarily a direct threat to financial stability. However, if the economy takes a turn to the worse, many households may be forced, or even choose, to reduce their consumption in order to continue to be able to pay off their loans. This could exacerbate a crisis and threaten financial stability, determines FI in a report on FI’s use of macroprudential tools.
Erik Thedéen: Will the banks withstand the next crisis – what role will capital requirements play?
Discussing how the banks will withstand the next crisis is undoubtedly asuitable topic in October 2018, which marks exactly ten years since the mostdifficult phase of the financial crisis.
FI raises the countercyclical buffer rate
FI has decided to raise the buffer rate from 2.0 to 2.5 per cent. The reason for this change is that the systemic risks have increased.
Erik Thedéen: On the Agenda: The Swedish FSA’s mandate and current challenges
The procyclical nature of the financial sector tends to amplify cycles and may turn a severe downturn into a financial crisis. One of FI’s tasks is to mitigate this pro-cyclicality.
Erik Thedéen: Higher countercyclical capital buffer?
A speech given by Erik Thedéen, FI's Director General, at the UBS Annual Nordic Financial Services Conference in Stockholm today.
Capital requirements of Swedish banks as of the second quarter 2018
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to the supervisory categories 1 and 2 as of the end of the second quarter 2018.
Changed method for the application of the risk weight floor for Swedish mortgages
FI’s Board of Directors decides to change the method used to apply the current risk weight floor for Swedish mortgages through Pillar 2 by replacing it with a corresponding requirement under Article 458 of the Capital Requirements Regulation. The change will enter into force on 31 December 2018.
FI grants Nordea authorisation to move to Finland
Finansinspektionen (FI) grants Nordea Bank AB authorisation to execute its merger plan and thus move the bank’s head office to Finland.
European Commission’s decision regarding the risk weight floor for Swedish mortgages
The European Commission has decided not to propose to the European Council a rejection of Finansinspektionen’s proposal to change the method for the application of the current risk weight floor for Swedish mortgages. This means that the measure may be implemented in Sweden.
Proposal to change Finansinspektionenʼs Regulations (FFFS 2014:33) regarding the countercyclical buffer rate
Finansinspektionen proposes to raise the countercyclical buffer rate to 2,5 percent. The rate is currently at 2 percent. The change will be effective from the 19 September 2019.
FI open to raising the countercyclical buffer rate in September
The next occasion on which FI will decide on the countercyclical buffer rate is in September. FI's Director General has decided that the preparatory work for the decision shall focus on enabling an increase in the rate to 2.5 per cent if such is deemed necessary. The countercyclical buffer is currently 2.0 per cent.
Preconditions for newcomers to the mortgage market
Sweden’s traditional bank-based model for granting and financing mortgage loans is challenged by new firms with alternative financing models.
Opinions from the ESRB and the EBA regarding changed method for application of the risk weight floor for Swedish mortgages
The ESRB and the EBA have submitted their Opinions to the European Council, the European Commission and Finansinspektionen regarding Finansinspektionen's intention to change its method for the application of the current risk weight floor for Swedish mortgages.
Stability in the Financial System
The Swedish economy continues to be strong, and resilience in the financial system is satisfactory. However, a long period of low interest rates and strong growth has resulted in an elevated risk appetite, high asset prices and high debt globally, among Swedish households and on the commercial real estate market. The high level of indebtedness makes the financial sector more sensitive to shocks, and, if necessary, FI will take additional measures to strengthen the resilience.
Risks can build up when the economy is strong
The Swedish economy continues to be strong, and resilience in the financial system is satisfactory. However, a long period of low interest rates and strong growth has resulted in an elevated risk appetite, high asset prices and high debt. This makes the financial sector more sensitive to shocks, writes Finansinspektionen (FI) in the first Stability Report of the year, which is being presented today.
EU notification regarding changed method for the application of the risk weight floor for Swedish mortgages
Finansinspektionen has notified the European Parliament, the EU Council, the European Commission, the ESRB and EBA on the intended measure to change the method for the application of the risk weight floor for Swedish mortgages under Article 458 of the CRR.
Capital requirements of Swedish banks as of the first quarter 2018
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to the supervisory categories 1 and 2 as of the end of the first quarter 2018.
FI-analysis 13: Low for long and large annuity payments
Theprevailing low interest rate environment is challenging for pension managers who pledge a guaranteed rate of return to their beneficiaries.
FI Supervision 3: Survey of Market Risks in Savings Banks
Finansinspektionen (FI) has conducted a survey of the management of market risks by savings banks and of their holdings in financial assets. FI’s assessment is that the majority of savings banks are managing their market risks in an acceptable manner.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 26 April not to change the countercyclical buffer rate. The buffer rate of two per cent, which has applied since 19 March 2017, shall thus continue to apply. The countercyclical buffer guide is set at 0 per cent.
Households continue to take on large mortgages
Household debt is continuing to rise. The number of new mortgagors with a high level of debt in relation to their income or the value of their home continues to be high. These are the conclusions drawn by Finansinspektionen (FI) from this year’s mortgage survey, which is being presented today. FI also highlights how tenant-owner associations’ debt increases the risks for households.
FI-analysis 12: The mortgage cap reduced household debt
This FI Analysis presents an assessment of the Swedish mortgage cap. The analysis indicates that the mortgage cap has changed household behaviour. Households with new mortgages borrow less than what they would have done if FI had not implemented the mortgage cap. They are also buying less expensive homes.
The Swedish Mortgage Market
Finansinspektionen (FI) follows the development of household debt on an ongoing basis. The mortgage survey serves as an important source of data for this work. High debt can mean risks for individual households, banks, financial stability and the macroeconomic devel-opment.
Proposal to change method for the application of the risk weight floor for Swedish mortgages
Finansinspektionen (FI) is proposing to change the method it currently uses to apply the current risk weight floor for Swedish mortgages through Pillar 2 by replacing it with a requirement within the framework of Article 458 of CRR. The change is proposed to enter into force on 31 December 2018.
Capital requirements of Swedish banks as of the fourth quarter 2017
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the fourth quarter 2017.
New Nordic-Baltic Memorandum of Understanding
The Swedish Ministry of Finance, the Riksbank, Finansinspektionen (the Swedish Financial Supervisory Authority) and the Swedish National Debt Office in its role as resolution authority, have produced, together with their equivalents in Denmark, Estonia, Finland, Iceland, Latvia, Lithuania and Norway a new Memorandum of Understanding on cooperation and coordination on cross-border financial stability.
Erik Thedéen: Rules prevent crises
Finansinspektionen is responsible for macroprudential policy in Sweden, which includes both promoting financial stability and counteracting financial imbalances. We are also tasked with promoting a high level of consumer protection on the financial markets. One of the reasons that we have been given the responsibility for macroprudential policy is that financial crises have proven themselves to be very expensive.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) decided on 29 January not to change the countercyclical buffer rate. The buffer rate of two per cent, which has applied since 19 March 2017, shall thus continue to apply. The countercyclical buffer guide is set at 0 per cent.
Financial stability and macroprudential policy
Finansinspektionens Director General Erik Thedéens speech in the Standing Committee on Finance the 23 januari 2018.
2017
FI recognises the risk weight floor for Finnish mortgage exposures
Finansinspektionen has passed a decision to recognise the Finnish supervisory authority’s decision to implement an average, firm-specific risk weight floor of 15 per cent for Finnish mortgage exposures.
Capital requirements of Swedish banks as of the third quarter 2017
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the third quarter 2017.
Proposal for a stricter amortisation requirement for households with high loan-to-income ratios
FI is proposing changes to Finansinspektionen’s regulations (FFFS 2016:16) regarding amortisation of loans collateralised by residential property. The regulations cover mortgages granted by credit institutions, i.e. banks and credit market companies.
Erik Thedéen: Incentives vs. risk
“The fundamental problem is the potential conflict that inherently arises from the interplay between economic incentives and excessive risk-taking”, said Erik Thedéen in a speech on Thursday at the School of Business, Economics and Law at the University of Gothenburg. Erik Thedéen analysed the causes underlying this problem and presented some of the measures introduced to mitigate it.
Decision regarding the countercyclical buffer rate
FI decided on 25 October not to change the countercyclical buffer rate. The buffer rate of two per cent, which has applied since 19 March 2017, shall thus continue to apply.
Commercial real estate and financial stability
FI:s director general Erik Thedéens speech about commercial real estate and financial stability held at the conference DI Bank in Stockholm 10 maj 2017.
Thedéen: The role of macroprudential policy in Sweden
The financial crisis in 2008-09 demonstrated just how vulnerable the international financial system was and had enormous consequences for the economies in the western hemisphere. Even if traditional stabilisation policy tools, such as monetary and fiscal policy, were able to mitigate the crisis, they did not successfully prevent the build-up of risk that occurred over a long period of time prior to the crisis. The crisis therefore triggered the development of macroprudential policy, which aims to reduce the risk of financial crises and their subsequent effects.” It is with these words that Erik Thedéen began his speech at Finansdagen in Stockholm.
Capital requirements of Swedish banks as of the second quarter 2017
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the second quarter 2017.
Decision regarding the countercyclical buffer rate
FI decided on 14 July not to change the countercyclical buffer rate. The buffer rate of two per cent, which has applied since 19 March 2017, shall thus continue to apply.
FI’s Pillar 2 capital assessment method for systemic risk associated with securitisation
Finansinspektionen considers it to be necessary to implement a back-stop within Pillar 2 to limit effects on the total credit supply from systemically critical securitisation. FI is publishing today a method that it intends to use during its capital requirements assessment.
FI’s view on financial stability and the risks for financial imbalances
Erik Thedéen visited the Committee on Finance today for a Q&A session. He discussed the unprecedented economic conditions that Sweden is currently experiencing.
Stability in the Financial System
The Swedish economy is thriving, but a strong economy combined with low interestrates has resulted in high asset prices and rapidly rising household debt.
FI Analysis 11: Consequences of a stricter amortisation requirement
Households with high loan-to-income ratios, i.e. large loans in relation to income, are vulnerable. They are sensitive to rising interest rates since their monthly expenses are affected more than households with lower loan-to-income ratios. They are also somewhat more sensitive to a loss of income, for example if they become unemployed.
Capital requirements of Swedish banks as of the first quarter 2017
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the first quarter 2017.
Swedish banking requirements for financial stability should be safeguarded
The design of the Swedish regulations for capital adequacy and crisis management is appropriate for reducing the risk of financial crises and ensuring effective management if a crisis were still to occur. This is the conclusion reached by Finansinspektionen (FI) and the Swedish National Debt Office in a joint report. The report emphasises that Sweden should safeguard national discretions in the framework of banking requirements in ongoing EU negotiations.
Decision regarding the countercyclical buffer rate
FI decided on 27 April not to change the countercyclical buffer rate. The buffer rate of two per cent, which has applied since 19 March 2017, shall thus continue to apply.
Erik Thedéen speaks to EU Parliament about new banking rules
Erik Thedéen is commenting today on the EU Commission’s proposed changes to banking regulations during a Q&A session in Brussels in EU Parliament’s Committee on Economic and Monetary Affairs (ECON).
Supervision of the banks
This year’s supervision report describes, at an overarching level, the Swedish banking system, how FI works with supervision and a number of topical risk areas currently in focus.
FI Analysis 10: Amortisation requirement reduced household debt
This FI Analysis shows that the amortisation requirement has helped households with new mortgages change their behavior. New mortgagors are taking smaller mortgages than what they would have done if FI had not implemented the amortisation requirement. These households are also buying less expensive homes.
Decision regarding the countercyclical buffer rate
FI decided on 29 March 2017 not to change the countercyclical buffer rate. The buffer rate of two per cent, which has applied since 19 March 2017, shall thus continue to apply. The countercyclical buffer guide is set at 0 per cent.
FI Analysis 9: Households’ interest rate adjustment periods – an economic vulnerability?
SUMMARY: In Sweden, both the percentage of mortgages that have a variable interest rate and household debts have risen sharply. This combination has made house-holds sensitive to rising interest rates.
Capital requirements of Swedish banks as of the fourth quarter 2016
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the fourth quarter 2016.
FI Analysis 8: Vulnerability indicators for liquidity
The vulnerability indicators FI identifies in this analysis show a slightly elevated level of vulnerability for liquidity. Several indicators contribute to this.
FI aims for unchanged countercyclical buffer rate in March
The next occasion on which Finansinspektionen (FI) will decide on the countercyclical buffer rate is in March. The preparatory work ahead of the next decision shall focus on maintaining the rate at its current level, which is currently 2 per cent.
2016
Decision regarding reciprocation of macroprudential measures in two EU countries
FI has published decisions regarding reciprocation of macroprudential measures in Estonia and Belgium.
Biennial Review of the Systemic Risk Buffer
As outlined in the capital requirements directive, FI must review the systemic risk buffer on an biennial basis. FI has reviewed the arguments originally set out to support a SRB buffer level of 3% at consolidated level for the four major banking groups and finds the arguments to still hold today.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) shall, in accordance with the Capital Buffers Act (2014:966), set a countercyclical buffer guide and a countercyclical buffer rate for each quarter.
Stability in the Financial System
The Swedish economy is strong, but the consequences for financial stability from the combination of rising resource utilisation and very low interest rates are difficult to assess. There is a risk that imbalances are building up, and even though they are difficult to identify and measure, they are very important to monitor.
Capital requirements of Swedish banks as of the third quarter 2016
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the third quarter 2016.
FI Analysis 7: Leverage ratio as a minimum requirement reduces banks’ buffers
A leverage ratio requirement could contribute positively to financial stability during normal conditions in that it increases the robustness of banks' capital adequacy.
How can the financial sector contribute to sustainable development?
Finansinspektionen is publishing today two reports on sustainability. Together, they serve as the report to the Government that FI was tasked with earlier in the year on the continued work with sustainability issues, how these issues are linked to financial regulation and supervision and how supervision can contribute to sustainable development in a constructive manner.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) shall, in accordance with the Capital Buffers Act (2014:966), set a countercyclical buffer guide and a countercyclical buffer rate for each quarter.
FI Analysis 6: Vulnerability indicators within the insurance sector
FI has identified a number of quantitative indicators that point toward factors in the insurance sector that could have an effect on financial stability. These indicators show that there was good resilience in the insurance sector at the end of the year.
Capital requirements of Swedish banks as of the second quarter 2016
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the second quarter 2016.
FI decides on stress test methodology for determining the capital planning buffer
FI has now decided on the stress test methodology that will be used for determining the capital planning buffer for the largest Swedish bank companies. The methodology, which is described in more detail it in a new memorandum, is based on the proposal that FI published on the 9 May.
FI aims for unchanged countercyclical buffer rate in September
The next occasion on which Finansinspektionen (FI) will decide on the countercyclical buffer rate is in September. FI’s Board of Directors has decided that the preparatory work ahead of the next decision shall focus on maintaining the rate at its current level, which is currently 2 per cent.
FI analysis 5: Macroeconomic effects of dept-to-income limits
House prices have been rising and, as a result, so has the debt of households in relation to their income – i.e. their debt-to-income (DTI) ratios. A DTI limit could slow this trend, but limiting households' opportunities to borrow would also slow consumption and economic activity.
Comments regarding the referendum in UK
Finansinspektionen is following the development on the financial markets and is maintaining an ongoing dialogue with the Ministry of Finance, the Riksbank and the National Debt Office. We have contingency plans in place and are working closely with the Swedish banks.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) shall, in accordance with the Capital Buffers Act (2014:966), set a countercyclical buffer guide and a countercyclical buffer rate for each quarter.
FI’s response to proposed new requirement for banks to ensure effective crisis managment
The newly implemented Resolution Act introduces new rules and requirements, including requirements about loss absorbing liabilities. In its response to the Debt Office’s proposal, FI says it is important that such new rules and requirements are consistent with Finansinspektionen’s (FI) supervision and the currently applicable capital requirements.
Stability in the Financial System
FI makes the assessment that the resilience of the financial system in Sweden is satisfactory, but vulnerabilities remain. The Swedish banks have buffers, but they fund themselves in capital markets, which makes the banking system vulnerable to shocks to confidence. Liquidity in systemically important securities markets has not changed in recent years.
Capital requirements of Swedish banks as of the first quarter 2016
Note: Capital requirements of the Swedish banks, first quarter 1 2016 has been revised. The outcome of the 2015 SREP for Skandiabanken is now accounted for in this memorandum. No other changes have been done."
New methods for banks' risk weights and capital requirements decided
FI has formally adopted the supervisory methods which will be used in the supervision of the banks' internal models for corporate exposures. The banks should now assume that at least every fifth year is a downturn year in probability of default calculations.
Consultation response regarding Review of the Riksbank's Monetary Policy 2010-2015
FI as submitted its consultation response regarding Review of the Riksbank's Monetary Policy 2010–2015 (2015/16:RFR6) conducted by Marvin Goodfriend and Mervyn King on commission from the Committee on Finance. The consultation response assesses the reviewers' recommendations regarding financial stability and the interplay between monetary policy and financial stability.
IMF evaluates stability and functionality of the financial market in Sweden
The International Monetary Fund (IMF) will visit Sweden at the invitation of the Ministry of Finance and Sveriges Riksbank both in mid-April and in August to make a special assessment of the financial sector and the public authorities' work on financial stability, what is known as an FSAP (Financial Sector Assessment Program).
FI aims for unchanged countercyclical buffer rate in June
The next occasion on which Finansinspektionen (FI) will decide on the countercyclical buffer rate is in June. FI's Board of Directors decided on 18 April 2016 that the preparatory work ahead of the next decision shall focus on maintaining the rate at its current level, two per cent.
Climate changes and financial stability
Sweden and Swedish financial institutions have small exposures to climate risks. This means that the current risk that climate changes will cause problems for financial stability is low. However, there is a need for more information as well as improved transparency surrounding climate-related risks within the sector. Financial institutions also need to develop stress tests and analyses in order to identify what kind of consequences could arise from these risks and how such consequences could be prevented.
Pillar 2 capital requirements for maturity assumptions
FI intends to introduce a maturity floor of 2.5 years under Pillar 2 for banks authorised to use the advanced IRB approach for exposures to corporates.
FI's supervision of banks' calculations of risk weights for exposures to corporates
FI is implementing a new assessment method to evaluate the banks' calculations of risk weights both in general and for exposures to corporates.
FI proposes new framework for macroprudential measures
FI shall be entitled to propose measures, the Government shall approve the measures and the Swedish Parliamentary Committee on Finance shall evaluate FI's work. FI Director General Erik Thedéen is presenting this framework in a speech today.
Capital requirements of Swedish banks as of the fourth quarter 2015
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the fourth quarter 2015.
FI open to raising the countercyclical buffer rate in March
The next occasion on which FI will decide on the countercyclical buffer rate is in March. FI's Board of Directors decided on 18 January 2016 that the preparatory work for the decision shall focus on enabling an increase in the rate if such is deemed necessary. The rate is currently at 1.5 per cent.
2015
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) shall, in accordance with the Capital Buffers Act (2014:966), set a countercyclical buffer guide and a countercyclical buffer rate for each quarter.
FI-analysis 4: A model for household debt
This FI-analysis introduces a model for household debt in Sweden.
FI analysis 2: Finansinspektionen's vulnerability indicators
FI regularly monitors the vulnerabilities in the financial system. FI is now taking this a step further by creating a categorization for grouping and studying indicators of vulnerability. A systematic review of indicators helps to identify and follow vulnerabilities, which makes it easier to understand the risks of financial or macroeconomic instability.
Stability in the financial system 2015:2
Resilience in the Swedish financial system is satisfactory. However, the sharp rise in housing prices means that household debt is growing rapidly.
FI increases transparency in capital requirement for Swedish banks
FI today disclosed for the first time the actual capital requirements for the ten largest Swedish banks and credit institutions at the end of the third quarter of 2015. This is to increase clarity with regard to the effects of FI's capital requirements, including Pillar 2.
Measures against risks from household indebtedness
Summary of the speech by Finansinspektionen's Director General Erik Thedéen at the Centre for Business and Policy Studies' seminar on the economic situation on 19 November 2015.
Martin Noréus: Amortisation requrement and risk weights - two current issues for macroprudential policy
FI's acting Director General Martin Noréus held the speech "Amortisation requirement and risk weights – two current issues for macroprudential policy" at UBS annual Nordic Financial Services Conference on 10 September 2015.
Decision regarding the countercyclical buffer rate
Finansinspektionen (FI) shall, in accordance with the Capital Buffers Act (2014:966), set a countercyclical buffer guide and a countercyclical buffer rate for each quarter.
Capital needs of Swedish banks as of the second quarter 2015
Finansinspektionen publishes the capital needs of the ten largest Swedish banks and credit institutions as of the end of the second quarter 2015.
Recognition of other Member States' countercyclical buffer rates
Finansinspektionen decides to recognize countercyclical buffer rates up to 2.5 per cent that are set by the designated authority of another EEA country. The firms concerned shall use these buffer rates to calculate their firm specific countercyclical capital buffers.
The future structure of banks' capital requirements
At the Financial Stability Council meeting of 15 June, Finansinspektionen presented its views on the future structure of banks' capital requirements.
Joint report to the Financial Stability Council
When representatives of the Government, Finansinspektionen (the Swedish Financial Supervisory Authority), the Riksbank and the Swedish National Debt Office met on 15 June in the Financial Stability Council, the authorities all contributed reports as bases for discussion. A summary of the report on driving forces behind household indebtness is now published.
Driving forces behind household indebtedness
In this report, Finansinspektionen, Sveriges Riksbank and the Swedish National Debt Office present a general description of the driving forces behind the rise in household indebtedness. A central conclusion in the report is that indebtedness is largely linked to developments on the housing market.
Swedish banks' systemic importance (O-SII)
FI intends to comply with the European Banking Authority's (EBA) guidelines on criteria to assess other systemically important institutions (O-SIIs).
FI analysis 1: The Too-Big-To-Fail Guarantee for Swedish Systematically Important Banks
FI has decided to launch a new report series, FI-analysis. This is our first report in this series where FI presents studies and analysis of questions that is of particular importance to FI.
Stability in the financial system
Finansinspektionens assessment is that the resilience in the financial system is currently satisfactory.
Capital needs of Swedish banks as of the first quarter 2015
Finansinspektionen publishes the capital needs of the ten largest Swedish banks and credit institutions as of the end of the first quarter 2015.
