Moody’s cuts its ratings on three Swedish banks
CREDIT rating agency Moody’s last night downgraded the long-term debt and deposit ratings for three Swedish banks: Nordea, Svenska Handelsbanken and Landshypotek.
Moody’s blamed the banks’ high reliance on wholesale funding, modest profitability and risks to asset quality due to the EU export-oriented Swedish economy for the move.
However, Moody’s emphasised that the Swedish banks credit ratings remained at the higher end of the range in Western Europe.
“This relative positioning reflects Moody’s view that Swedish banks are overall in a stronger position than their European peers to manage the credit risks emanating from the challenging European operating environment, limiting the extent and scope of today’s rating actions,” the agency said.
The move follow’s Moody’s downgrade last week of 16 Spanish banks.
There is concern the changes could raise the banks’ borrowing costs although analysts believe Swedish banks will continue to perform better relative to European peers.
Most banks in the Nordic region have little to no exposure to crisis-hit countries in southern Europe, and have had continuous access to funding markets.
High capital buffers and moves to extend their funding duration have made Nordic banks attractive to investors seeking a haven from the debt storm.