Sweden may change bank loan guarantees

So far, only Swedbank has joined the guarantee programme, launched last month as part of a package of measures to boost financial stability. The other big Swedish banks — Nordea, Handelsbanken and SEB — have remained on the sidelines.

“We are prepared to look at new solutions,” Financial Markets Minister Mats Odell said after meeting with representatives of the banks.

“We’ve got some new information here today, and we will consider how we can move forward,” he told journalists.

Odell said the question of introducing legislation making the guarantee scheme compulsory, as has been speculated in local media, had not been discussed at the meeting.

Finance Minister Anders Borg, who also attended the talks, said the government would look into what needed to be clarified in the guarantee scheme and if any additions to the programme were necessary.

The centre-right coalition government’s financial stability package allows banks a state guarantee for new borrowing of up to 1.5 trillion kronor ($183 billion) in return for a fee of 0.5 percent of the loans or more.

But the plan also places restrictions on issues such as salaries to top management and sets minimum requirements on measures such as core capital.

The banks which have so far stayed outside the programme have expressed concern that joining could hamper expansion, and have said it was unclear how the plan squared with measures launched elsewhere in the Nordic region where the banks all operate.

Nordea Chief Financial Officer Fredrik Rystedt said after the meeting on Thursday that he did not want to comment on whether the bank, the Nordic region’s largest, would join the scheme.

“We will reach a conclusion on that shortly,” he told journalists.

“There is no deadline, but of course it is of the essence that we reach a decision quite soon, and we will do so.”

“It is clear that this problem of growth restrictions that has existed in the scheme is one of the questions that has been discussed recently, today included, and which we are trying to understand the consequences of,” Rystedt added.

SEB Chief Executive Annika Falkengren said the bank was worried that joining the scheme might raise expectations that the bank would be able to lower mortgage costs to an inordinate degree.