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Expensive mortgages should be expected in the nearest future – SEB CEO Annika Falkengren
Thursday, 31 May 2012
The CEO of the Swedish bank, SEB Annika Falkengren wants to heap more
pressure on cost to customers in a new move which is being described as
the banks shifting cost away as means of expanding their profit line.
Annika Falkengren (pictured below), according t a write up on Swedish
daily Svenska Dagbladet posit that Banks need to increase
transparency and account for their mortgage margins more equally. The
effect of this will be that in the future, customers can count on more
Mortgages business is one of the major sources of liquidity to Swedish
bank and the Swedish FSA reports recently that Swedish banks are making
lots of money from their banks' margins on mortgages which have gone up
since the financial crisis.
In a subtle but tactical way, Annika Falkengren agrees with the view
that banks have to increase transparency and to find a single
"I'm a little concerned that all banks report their borrowing costs in
various ways. I understand that customers find it difficult. Of course
we must try to find a model that we all present more”, she told Svenska
Dagbladet and believes that the responsibility lies of the Bankers'
According to Svenska Dagbladet's so-called interest-map, fund rates are
now falling at all banks - a consequence of lower borrowing costs. But
according to Annika Falkengren there is no guarantee that interest
rates will continue to fall. Instead, customers can count on a rise,
partly because the Swedish authorities pressurised them to increase the
capital adequacy requirements, writes Svenska Dagbladet.
"Right now it does not look like we will raise. We have good access to
debt markets. But I can not promise anything to come. In the long term,
I think that mortgages will become more expensive, "says Annika
Falkengren to Svenska Dagbladet.
In effect, customer should pay for the banks being more transparent or
that when mortgages are made simple customer should bare the brunt.
So far however, SEB has been the winner in the tug of war for mortgage
customers in Swedish real estate market. In 2011, SEB was up to third
place in terms of market share, after Swedbank and Handelsbanken. One
crucial reason for SEB’s third place is price. According to analysts,
SEB cheaper among the other banks with the average interest rate on a
three-month loan in May being 3.45 percent, compared to 3.86 in state
Annika Falkengren would not consent to the fact that SEB deliberately
dumped prices in order to attract new customers. The influx of
customers is more a consequence that in the competition, Swedbank
has become more restrictive, according to her.
“We have tried not to raise prices rather than lowering them. But it is
gratifying that we are well placed in the Interest Map. We have tried
to ensure that customers get the best possible price.”
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