Swedbank AB

Retail banking market leader in Sweden, with a large customer base and wide distribution network. Strong risk-adjusted capital (RAC) levels, reflecting the low risk profile of domestic operations. Strong earnings capacity. More concentrated exposure to its domestic market and residential segment than peers. Greater reliance on wholesale funding than international peers. The negative outlook on Swedbank reflects the possibility of a downgrade over the next six to 12 months if the ongoing regulatory investigations identify serious control and governance weaknesses, which we consider not aligned to the rating level or that we feel the bank is unlikely to fix in the near term. Moreover, we could lower the rating if the bank were to face significant regulatory fines and penalties,

...Greater reliance on wholesale funding than international peers. Outlook: Negative The negative outlook on Swedbank reflects the possibility of a downgrade over the next six to 12 months if the ongoing regulatory investigations identify serious control and governance weaknesses, which we consider not aligned to the rating level or that we feel the bank is unlikely to fix in the near term. Moreover, we could lower the rating if the bank were to face significant regulatory fines and penalties, which would weaken its financial profile, including its ability to readily build a sizable buffer of additional loss-absorbing capacity over our outlook horizon. We could consider revising the outlook to stable once the likely outcome of the regulatory investigations become clearer and we consider their impact on Swedbank's creditworthiness to be manageable, while its reputation and franchise remain intact....

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