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Swedish Banking Sector Under Scrutiny: Regulatory Changes Loom

STOCKHOLM, Sweden - The Swedish banking sector has been undergoing significant changes in recent years, with a focus on depositor protection, transactions between affiliates, regulatory challenges, consumer protection, and future changes. In an exclusive interview, industry experts shared their insights on the current state of play and what to expect in the coming years.

Depositor Protection Scheme

In 1996, Sweden established a depositor protection scheme, which has undergone several amendments since then. The maximum guaranteed amount under the scheme is €100,000, covering depositors in all categories except other banks and securities firms. The guarantee does not apply to savings in the form of:

  • Securities
  • Insurance plans
  • Individual pension savings plans

Transactions between Affiliates

Swedish financial markets law restricts certain related party transactions, including those with:

  • Board members
  • Employees holding leading positions
  • Shareholders with a stake above 3%
  • Their spouses or partners

The law requires approval from the bank’s board of directors for any such transaction, even if it is commercially justified.

Regulatory Challenges

The Swedish banking industry faces several regulatory challenges, including:

  • Rapid growth in mortgage lending
  • High levels of household indebtedness
  • Concerns over a potential housing bubble

Despite being well-capitalized, banks may face further strengthening of regulatory regimes to cater for possible downturns in the market or economic conditions.

Consumer Protection

Banks are subject to consumer protection rules, with legislation aimed at indirectly protecting customers by ensuring a safe and sound business within the bank. Recent changes have been introduced to deal with concerns over:

  • Small loans with fast payouts
  • Limited credit assessments

Future Changes

Industry experts anticipate an increased focus on:

  • Proportionate application of regulatory regimes for smaller banks
  • Further regulatory changes to enable growth in the fintech sector while ensuring financial stability and consumer protection.

Date: 22 February 2021