FI supervises the firms that have received authorisation from FI to conduct business on the financial market.
Supervision is one of FI's most important tools. Part of this work is about managing incidents and urgent problems, but the main purpose of supervision is to prevent problems. In order for supervision to make the greatest difference and reap the most benefits, it must therefore and to the greatest possible extent be both risk-based and forward-looking.
Banking supervision aims to secure a reasonable balance between credit institutions' risks and capital so as not to jeopardise the stability of the system and the money of depositors.
The four major Swedish banks are systemically important through their predominant position on the Swedish financial market, their complex business models and their extensive cross-border operations. They are therefore subject to more detailed supervision.
It is also important to monitor the banking sector from a consumer protection perspective so consumers can make well-informed decisions based on clear information.
In terms of the banking sector, FI has primary responsibility for roughly 160 firms. Approximately 90 are banks and the rest are credit market companies, including mortgage institutes, and payment service companies.
The supervision of large banks with operations in several countries is conducted through supervisory colleges. These colleges are groups of representatives from the supervisory authorities in the EU countries where the bank is active. Work in the colleges is governed by cooperation agreements between the countries' authorities. FI chairs the supervisory colleges for the Swedish banks.
FI's supervision work is largely governed by the Supervisory Review and Evaluation Process (SREP). The aim of SREP is to evaluate the financial firms' capital and liquidity on an ongoing basis. For financial firms that are operational in several countries, SREP is conducted in cooperation with the other countries' supervisory authorities within the framework of the firm's supervisory college. SREP is conducted annually for the largest financial firms.
As a part of SREP, FI conducts risk assessments for all major areas of risk, such as credit risk, liquidity risk, market risk and operational risk. These assessments are based on the information in the financial firms' internal capital adequacy assessment process (ICAAP) and other information received by FI as part of its supervision. For several significant types of risk FI also uses its own approach to assessing the firms' Pillar 2 capital needs.
FI then determines (where necessary together with the supervisory college) the capital adequacy resources that the financial firm must hold to cover its risks and be allowed to conduct business.