Major Swedish banks demonstrate considerable resilience in the stress test Finansinspektionen (FI) conducted in 2022. The test identifies the potential effects on the five largest Swedish banks’ financial positions when interest rates and inflation increase. This memorandum (only available in Swedish) describes the method behind the stress test and its results.
Rising interest rates, decreased risk-taking and a slowing economy are weighing on highly indebted commercial real estate firms and households. The rapid transition to higher interest rates and a decreased willingness to take risk means financial stability risks have increased since spring. At the same time, this transition may lead to lower risk-taking and indebtedness in the long run, thus lowering stability risks.
High inflation has led to rapidly rising interest rates. Given the current rapid change in conditions, both participants on the financial markets and borrowers need to transition quickly. In the short term, this means elevated risks and greater uncertainty. The already high risks in the commercial real estate sector have continued to increase.
FI’s stress tests show that the majority of Swedish funds appear to be able to handle relatively large outflows in an effective manner. However, some corporate bond funds and a relatively large share of high-yield bond funds may experience liquidity problems under stressed market conditions.
Finansinspektionen publishes the capital requirements of the largest Swedish banks and credit institutions that belong to supervisory categories 1 and 2 as of the end of Q3 2022.
Finansinspektionen has reciprocated the Norwegian systemic risk buffer.
Erik Thedéen, Director General of Finansinspektionen (FI), spoke at the Öresundsmarknaden conference about FI’s view on the commercial real estate market.
FI leaves the countercyclical buffer rate unchanged. The buffer rate of 2 per cent, which will be applied as of 22 June 2023, shall thus continue to apply. The countercyclical buffer guide is calculated at 0 per cent.
The minutes from the Financial Stability Council’s extraordinary meeting on 4 September is now available.
The Swedish Financial Stability Council agrees on measures to safeguard financial stability. The council met on Sunday the 4th of September for an extraordinary meeting due to the liquidity problems in the market for electricity derivatives.