Monday, 2 February 2009

S.O.S.! Sweden Banks Face Portfolio Losses, S&P Warns


Poor thing! Who will take care of
their money while on holiday?


Sweden's banks face increasing asset quality problems, despite the inherently low risk in the country's banking system, according to Standard and Poor's. Non-performing loans and loan losses in the corporate sector are poised to rise significantly over the medium term, while loan losses at Swedish banks will surge sharply along 2009, fueled by problems in their Baltic loan portfolio, according to the S&P report titled "Bank Industry Risk Analysis: Swedish Banks Face Increasing Asset Quality Problems At Home And Abroad.´´

The report confirms that one of the most solid banking sectors in the world may not be immune to the global woes of the industry. Remember that Sweden was the first developed economy in having a systemic banking crisis that wiped out most of its banks, in the late 1980s.
Yet, S&P predicts that, despite a moderate climb in unemployment rations, Swedish consumers will prove much more resilient as income tax cut and a decrease in borrowing costs help their pockets. S&P still considers the Swedish banking system to be of very low risk, on a par with those of Finland, France, the Netherlands, Switzerland and Canada.

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