Bloomberg News

Sweden Shelves Asset Sales Indefinitely as Turmoil Persists

November 16, 2011

(Updates with EU debt estimates in fifth paragraph.)

Nov. 10 (Bloomberg) -- Sweden is shelving plans to sell state assets indefinitely as equity-market declines prove too deep to risk divestments, Prime Minister Fredrik Reinfeldt said.

“With the downturn of the stock market we’re not as eager as we maybe used to be,” Reinfeldt, 46, said in an interview in Stockholm. “I could bring this up again in 2014 with the electorate” at which point the issue “might return,” he said.

The government first earmarked Nordea Bank AB, phone company TeliaSonera AB and mortgage lender SBAB AB for divestment after coming to power in 2006. Financial Markets Minister Peter Norman said last month a block share sale of Nordea remains an option, adding the government is more likely to dispose of its 13.5 percent stake gradually.

The OMX benchmark index of Sweden’s 30 biggest traded companies has slumped 18 percent this year amid a global sell- off spurred by Europe’s deepening debt crisis. Sweden in February sold a 19 billion-krona ($2.8 billion) stake in Nordea, announcing at the time it will continue reducing the stake through this electoral term in an effort to cut state debt.

“It’s not my major issue because I’ve already lowered the debt level,” Reinfeldt said. The government will post debt at 36.3 percent of gross domestic product this year, down from 39.7 percent in 2010, the European Commission estimates. Debt was 50.4 percent of GDP in 2005, one year before Reinfeldt took office.

Thwarted by Opposition

Attempts by Reinfeldt’s minority-government to sell stakes in state-owned companies were thwarted when the opposition in March blocked the planned sales of TeliaSonera, SBAB Bank and utility Vattenfall AB. Lawmakers also opposed a public offering of postal services company Posten Norden AB.

The state has had a mandate from parliament to sell all its shares in Nordea since 1991 which is still valid. The opposition Green Party and Sweden Democrats in March didn’t back a proposal by the Social Democrats, the biggest non-government party, to rescind that commission.

“I’m just accepting the fact that parliament has withdrawn a few of the companies we had on our list,” Reinfeldt said.

Since coming to power five years ago, the government has sold Vin & Sprit AB, the maker of Absolut vodka, property company Vasakronan AB, part of stock-market operator OMX AB and some of its holding in TeliaSonera.

--With assistance from Adam Ewing in Stockholm. Editors: Tasneem Brogger, Jonas Bergman.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus