Skandinaviska Enskilda Banken AB (publ)

A large Nordic corporate and financial institutions business franchise. Strong risk-adjusted capitalization underpinned by stable earnings. Sound asset quality and low loan losses in the corporate and retail loan portfolio. Concentration of relatively large single-name exposures. Predominance of wholesale funding and corporate deposits in the funding profile. The stable outlook reflects our expectation that Sweden-based Skandinaviska Enskilda Banken (publ) (SEB) will maintain resilient earnings and strong capital, with the risk-adjusted capital (RAC) remaining above 10% over the next two years. This is supported by Sweden's benign economic environment and its housing market's gradual adjustment to increased housing supply and stricter amortization requirements for new residential mortgage loans. We also anticipate that SEB will build a considerable additional loss-absorbing capacity (ALAC)

...Outlook: Stable The stable outlook reflects our expectation that Sweden-based Skandinaviska Enskilda Banken (publ) (SEB) will maintain resilient earnings and strong capital, with the risk-adjusted capital (RAC) remaining above 10% over the next two years. This is supported by Sweden's benign economic environment and its housing market's gradual adjustment to increased housing supply and stricter amortization requirements for new residential mortgage loans. We also anticipate that SEB will build a considerable additional loss-absorbing capacity (ALAC) buffer in the coming years as it fulfils its minimum requirement for own funds and eligible liabilities (MREL). To do so, we expect SEB will replace a large share of senior unsecured debt with senior subordinated debt instruments through 2022. As such, we believe that SEB's ALAC buffer will durably exceed 5% of our risk-weighted assets (RWAs) metric by 2021. Therefore, we already incorporate one notch of uplift for ALAC support into our long-term...

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