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Swedish regulator notifies Nordea, Handelsbanken of capital requirements

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Swedish regulator notifies Nordea, Handelsbanken of capital requirements

The Swedish FSA, or Finansinspektionen, set a common equityTier 1 ratio requirement of 17.3% for Nordea Bank AB (publ) as of Sept. 30, compared to a CET1ratio and a pro forma ratio, including synthetic securitization, of 16.8% and17.2%, respectively, as of June 30.

Nordea expects to make significant progress toward meetingits "capital and dividend policy targets" when it discloses its third-quarterresults. The lender added that a final decision on its dividend policy will betaken at Nordea's annual general meeting in 2017.

"Adjusting to the new requirements will not affect ourbusiness," CEO Casper von Koskull said.

Citing an internal document at the Swedish FSA, Svenska Dagbladet reported that Nordeamay need up to 80billion Swedish kronor of extra capital to meet the FSA's stricter risk-weight requirementsfor corporate lending, Bloomberg News reported June 21. Nordea insisted that ithad enough capital to fulfill all capital requirements. The FSAsaid at the time the additional capital requirements for Nordea will be"significantly lower than what was stated in the article."

Meanwhile, Svenska Handelsbanken AB (publ) disclosed Sept. 30 thatthe Swedish FSA's assessed requirement for the bank's CET1 capital correspondsto 21.1% at 2016-end. Handelsbanken's CET1 ratio stood at 23.0% as of June 30.

The required ratio includes capital surcharges in Pillar IIfor increased risk weights for corporate exposures and for the introduction ofa maturity floor for these exposures. The total surcharge related to increasedrisk weights corresponds to 1.8 percentage points of CET1 capital while thatfor the maturity floor corresponds to 0.4 percentage points of the CET1 ratio.

Handelsbanken noted that it has applied for approval of newcalculation models due to the Swedish regulator's intention to increase theaverage risk weight for corporate exposures.

As of Oct. 3, US$1 was equivalent to 8.56 Swedish kronor.