Swedish banks show resilience in European stress test

2016-07-29 | EBA News Bank

The major Swedish banks have resilience against a sharp deterioration of the economic environment. This is the result of an EU-wide stress test performed by the European Banking Authority (EBA).

The stress test exposes the EU-wide banking system for a scenario that entails a macroeconomic downturn in combination with falling prices of real estate. The stress test is not of the type 'pass or fail'. The scenario is evaluated during three years from December 2015 to December 2018.

The result of the stress test shows that the major Swedish banks have resilience against a sharp deterioration of the economic environment. In terms of the common equity tier 1 (CET1) capital ratio the result for the adverse scenario between 2015 and 2018 is the following:

  • For Handelsbanken the CET1 capital ratio decreases from 21.2 percent to 18.5 percent, a decrease by 2.7 percentage points.
  • For Nordea the CET1 capital ratio decreases from 16.5 percent to 14.1 percent, a decrease by 2.4 percentage points.
  • For SEB the CET1 capital ratio decreases from 18.8 percent to 16.6 percent, a decrease by 2.2 percentage points.
  • For Swedbank the CET1 capital ratio decreases from 24.1 percent to 22.3 percent, a decrease by 1.9 percentage points.

It is the FI internal stress test that determines the size of the capital planning buffer in relation to the banks solvency needs as determined by the supervisory review and evaluation process (SREP) in September. FI:s stresstest is described in the memorandum Finansinspektionen's stress test of major Swedish banks (2014-11-28).

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