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Lower credit rating for major Swedish banks but SEB and Swedbank smile for now
Friday, 25 May 2012
Scandinavia's largest bank Nordea and Swedish bank, Handelsbanken have
their credit ratings lowered by Moody's. On the other hand, Swedbank
had to draw a sigh of relief for not being seen and indicted.
Moody's announced in mid-February this year that they had put 114
European banks on the watch list, including the four major Swedish
banks, for a possible downgrade. Since then, the Swedish banks have
been aware of the threat of lowered credit ratings and on Thursday, it was expected that a definitive answer would come knocking.
At midnight, Thursday to Friday, the Swedish daily, Dagens Nyheter,
said sources familiar with the paper had said that Nordea and
Handelsbanken in the day received notice from the institution that
their long – term credit rating would be downgraded by one step in the
ten grade scale, from the third best Aa2 to Aa3.
For those banks that receive a downgraded credit rating, it would mean
that it becomes more expensive to borrow money, and the effect is that
they risk getting fewer and fewer investors seeking to do business with
At the beginning of last week 26 Italian banks saw their credit
rating down graded by between one and four steps and a few days later,
the Spanish banking sector suffered the same fate when 16 banks' credit
ratings were lowered.
Some analysts have already determined that banks would seek to
compensate for their higher costs as such might turn customers away.
While rating agencies have set junk status in many southern European
financial firms because of the States' own problems, the Swedish
government's strong public finances meant that the Swedish banking
market has been regarded as strong by international standards.
According to Moody's, however, both SEB and Swedbank ratings will remain high and thus would not be decrease.
Landshypotek, which works to finance investments in agriculture and forestry, also saw its rate lower by two grade points.
By Scancomark.se Team
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