Research Update: Sweden-Based SEB Affirmed At 'A+/A-1' Despite Regulatory Criticism Of Anti-Money-Laundering Governance; Outlook Stable

On June 25, 2020, the Swedish FSA issued findings and a SEK1 billion sanction on SEB following its review of the bank's anti-money-laundering (AML) controls, particularly in regards to its Baltic businesses. The regulatory findings highlight historical deficiencies in the bank's AML framework that the bank will resolve in the short term. While clearly a negative development, in our view, the findings are in many ways less problematic than recent material deficiencies that regulators identified at Danske Bank and Swedbank, and we see the bank as well-positioned to remedy these gaps. As a result, we are affirming our 'A+/A-1' ratings on SEB. The stable outlook reflects our expectation that the bank's capitalization will withstand revenue and asset quality pressure stemming

...- On June 25, 2020, the Swedish FSA issued findings and a SEK1 billion sanction on SEB following its review of the bank's anti-money-laundering (AML) controls, particularly in regards to its Baltic businesses. - The regulatory findings highlight historical deficiencies in the bank's AML framework that the bank will resolve in the short term. - While clearly a negative development, in our view, the findings are in many ways less problematic than recent material deficiencies that regulators identified at Danske Bank and Swedbank, and we see the bank as well-positioned to remedy these gaps. - As a result, we are affirming our 'A+/A-1' ratings on SEB. - The stable outlook reflects our expectation that the bank's capitalization will withstand revenue and asset quality pressure stemming from the coronavirus pandemic, it will fully address identified control deficiencies, and it continues to build its cushion of loss-absorbing instruments....

Research Update