Swedish Bank Ratings Affirmed Amid Housing Market Transformation; Five Outlooks Revised To Stable

In our view, Sweden's housing market is undergoing a transformation amid increased supply and the impact of new amortization requirements, and we project prices could fall by 7%-10% from their August peak before stabilizing in 2018. However, we now see a stable economic risk trend, due to Sweden's robust economy, steady recovery of its trading partners, high household savings, and the continued low interest rate environment. Projections of banks' future issuance of bail-in-able debt support our ratings on the largest banks; however, such instruments complicate the Swedish authorities' ability to provide pre-emptive capital support, so we now view government support as uncertain. We are revising our outlooks on Swedbank, SBAB, Landshypotek Bank, Swedbank Sjuhärad, and Sparbanken Skåne to stable from

...STOCKHOLM (S&P Global Ratings) Nov. 24, 2017--S&P Global Ratings said today that it has affirmed its ratings on eight Swedish banks. At the same time, we revised our outlooks on five of the banks to stable from negative while maintaining our stable outlooks on the other three banks (see the ratings list). Our ratings and outlooks on Lansforsakringar Bank and Swedish Export Credit Corp. are unaffected, due to these banks' group and government ownership, respectively. The rating actions stem from our review of the Swedish banking sector, which led us to change our opinion of the market and government support for banks. More specifically, the outlook revisions reflect our view that the economic risk trend for Swedish banks is now stable rather than negative. This is although house prices are declining as a result of increased supply and the effect of current and proposed amortization requirements on demand. Sweden's economy remains strong, with unemployment falling and activity high. In addition,...

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