Swedish Listed Commercial Realty Companies To Reduce Their Debt
Finansinspektionen (FI) said larger, listed commercial real estate companies needed to reduce their roughly 1,500 billion Swedish crown ($143.68 billion) debt pile in case of further rates rises and declines in value. "In total, a debt reduction of about 100 billion SEK, or on average 15% per firm, is needed," FI said. "Many firms may need to sell a large portion of their property portfolio or raise capital by other means." Swedish banks are among the best capitalised in Europe, but lending to the property sector accounts for nearly half the total of business loans. During Sweden's financial crisis in the early 1990s, which was triggered by the commercial real estate sector, two banks were nationalised, the economy shrank for three years in a row and unemployment soared to around 10%. The financial supervisory authority said banks were resilient and could handle major credit losses, but that economic developments were uncertain. "For this reason, Swedish banks must continue to hold large buffers," it said. Households are also struggling to adapt to higher rates. FI said the main danger was from reduced consumption that could deepen the economic downturn. "Such a development can also entail an increased risk of problems in the financial sector," it said
Tags : Finansinspektionen Swedish crown Swedish banks financial supervisory