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Sweden’s Financial Supervisory Authority said it will demand higher requirements for banks’ liquidity buffers to ensure that credit institutions hold sufficient liquidity to manage periods without access to market funding.
The requirement, which will come into force at the start of next year, means that a bank’s liquid assets must manage outflows over a period of 30 days of “market stress,” the watchdog said in a statement on its website. The rules are based on guidelines from the international Basel Committee on Banking Supervision which are planned to be introduced within the European Union in 2015.
The FSA wants the levels of the liquidity buffers to be made public. Eight banks and credit institutions in Sweden with a balance-sheet total of above 100 billion kronor ($14.1 billion) would be covered by the rules, it said.
Parts of Sweden’s bank industry have criticized the government, arguing more rigorous standards than elsewhere will distort competition while the government, including Financial Markets Minister Peter Norman has said stricter rules are necessary to combat the risk of future financial crises.
Sweden in November told its four biggest banks to target stricter capital rules than those set by the Basel Committee and to meet the deadline six years earlier than the group’s 2019 target. Nordea Bank AB (NDA), Svenska Handelsbanken AB (SHBA), SEB AB (SEBA) and Swedbank AB (SWEDA), need to target 10 percent core Tier 1 buffers of their risk-weighted assets from January and 12 percent from 2015. That compares with the Basel Committee’s core capital target of at least 7 percent.
To contact the reporter on this story: Kim McLaughlin in Stockholm at firstname.lastname@example.org
To contact the editor responsible for this story: Tasneem Brogger at email@example.com