Large credit losses can result in otherwise profitable banks reporting a loss. This FI Analysis describes a methodology for estimating how large credit losses can be in a stressed macroeconomic scenario.
FI has decided to change the application of capital requirements for Swedish banks in order to adapt to the EU’s so-called banking package.
The European Commission has announced that it does not intend to object to FI's intention to extend the current risk weight floor for Swedish mortgages. This means that FI may implement the measure.
The tax rebate for interest expenses – the interest deduction – means that households borrow more, and can and want to pay more for homes. This means that the households experience an increase in both their liabilities and assets, which in turn could have an impact on the stability of the financial system. In this FI Analysis, we calculate the impact of a change to the interest deduction. The reason for this analysis is the direct link between interest deductions and households’ loans.
Commercial real estate firms are sensitive to changes in interest rate expenses and income. Following a shock, vulnerable commercial real estate firms could lead to credit losses for the banks.
As the crisis unrolled this past spring in full force, it required fast and extraordinary measures. For example, FI lowered the countercyclical buffer requirement for the banks and encouraged them at the same time to postpone their dividend payments until the situation had become clearer. During the autumn, FI repeated its message to the banks to not make any dividend payments in 2020.
Henrik Braconier, Chief Economist at FI, spoke on risks related to low interest rates at SNS/SHOF’s Finance Panel: Corporate Finance in a Low Interest Rate Environment.
The access of non-financial firms to credit is central for financial stability, particularly during financial crises. In recent years, the market for corporate bonds has grown steadily and currently plays an important role in firms’ financing. This analysis shows that it has not been easier to issue corporate bonds in Swedish krona during financial crises than to take a bank loan. This pattern deviates from previous research on the USA and the euro zone.
Erik Thedéen, Finansinspektionen's Director General and Chair of IOSCO's Task Force on Sustainable Finance made a speech at the conference Driving Global Standards on Sustainable Finance.
Finansinspektionen has notified the EU Parliament, the Council, the Commission, the European Systemic Risk Board (ESRB) and the European Banking Authority (EBA) that it intends to adopt a decision to extend the current risk weight floor for Swedish Mortgages for a period of one year, in accordance with Article 458 of the CRR.