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EBA’s 2011 stress test shows Swedbank has low risk


17-07-2011 18:01
The European Banking Authority (EBA), the EU’s banking regulator, carried out a stress test on Europe’s major banks. Swedbank’s result in this test showed a low risk.

In the stress scenario used by the EBA, Swedbank’s capitalisation will increase during 2011 and 2012 as a consequence of increased profits and decreased risk-weighted assets. The results reflect a low risk and very little exposure to countries with severe problem economies.

In the stress test, capitalisation was calculated according to Basel 2 transition rules, which meant that risk-weighted assets could not drop below 80 per cent of risk-weighted assets according to Basel 1 rules.

The part of Swedbank’s share capital consisting of preference shares (corresponding to about 1.8 percentage points of the bank’s core Tier 1 capital as per Basel 2 and about 1.3 percentage points as per the transition rules) was not calculated as core Tier 1 capital in EBA’s stress test. This means that the 2010 capitalisation figure that the EBA used as a starting point is lower than the figure Swedbank and the Swedish FSA normally arrive at.

“The EBA stress test shows that Swedbank has a low risk, which our own stress tests also confirm. It is important to note that Swedbank does not differentiate between preference shares and ordinary shares when assessing the bank’s capitalisation since the bank’s preference shares, like other share classes, are fully loss absorbing. The Swedish FSA has also confirmed that its view on Swedbank’s capitalisation has not changed,” said Johannes Rudbeck, head of Investor Relations at Swedbank.

Swedbank’s preference shares will be converted to ordinary shares in the second quarter of 2013.

Swedbank’s results in the EBA stress test

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