Finance Minister, Anders Borg's criticism of Swedish banks on Saturday falls on deaf ears


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Monday, 29 August 2011
Finance Minister Anders Borg's harsh criticism of Swedbank on Saturday has had no support, either from the Swedish central bank, Riksbank and the Swedish financial services authority Finansinspektionen. All banks, including Swedbank, on the contrary have strengthened their capital base, according to the Riksbank.

Swedbank has received tough comments on its plans to buy back its own shares for billions. One of the strongest critics is the Finance Minister, Anders Borg who described the purchases as “irresponsible”.

“I would have a very strong desire to warn against it, not least for the shareholders' sake. It is very important that the banks are well capitalized. From my perspective, I would certainly recommend Swedbank to cancel these planned payments,” said Anders Borg on radio Sweden on Saturday.

Criticism has also created some concern in the market about Swedbank's capital position. But Borg has received no support for his criticism frpm bodies such as the Riksbank. On the contrary, the Riksbank think that Swedbank has followed the central bank's recommendation.

“In December 2010 we sent a recommendation to the banks to increase or maintain their capital ratios, which they then had. Since January, all banks, including Swedbank, increased its capital ratios. Our view is that they have acted in line with the Riksbank's recommendations,” says Mattias Persson, head of the Riksbank's Financial Stability Department.

Asked if it shows responsibility for Swedbank to now plan to buy back shares rather than to further strengthen their capital base
Replies Peasson: -“As far as Swedbank plans are known, they will remain at a higher ratio than when we gave our recommendation.”

The Swedish FSA also made the same assessment as the Riksbank:
“We have ongoing dialogue with the banks of their capital position. We have been clear that they have proper buffers, both today and in the future, and the major Swedish banks are now some of the most well-capitalized in Europe,” says Finansinspektionen’s chief economist Lars Frisell.

Financial Markets Minister, Peter Norman believes in a statement that Swedbank is expressing "high ambitions regarding capital adequacy."
By Team

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