Risk and capital adequacy

Swedbank shall maintain a low risk level. Swedbank’s long-term risk profile shall be managed so that the core Tier 1 ratio impact from a severely stressed scenario, defined in the annual Internal Capital Adequacy Assessment Process (ICAAP), shall be no more than three percentage points. A vast majority of exposures shall be in mature markets such as Sweden. Good risk diversification is achieved through a broad base of customers and businesses from many different industries. The bank is also to maintain a sustainable balance between lending and deposits in all its markets. Customers’ cash flow, solvency and collateral are always the key lending variables. Strong internal control of credit, market and operational risks ensures the desired long-term risk profile.
 

Risk and capital adequacy report

On February 1st 2007, the capital adequacy rules Basel 2 came into effect in Sweden. The rules strengthen the link between risk taking and capital requirements and entail, among other things, stricter requirements on banks concerning risk management and information disclosure. Shareholders have an interest in a high return on the capital they invest in the bank and thus in ensuring that shareholders’ equity is not unnecessary high. For creditors and society, on the other hand, it is important that the bank maintains a sufficient buffer, or risk capital, to cover potential losses. The capital adequacy rules therefore set minimum requirements on the size of the buffer based on how much risk the bank assumes. Swedbank’s Risk and capital adequacy reports according to the rules is to be found on the right hand side under relevant links.