Riksbank: Banks' Improved Resilience

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Major Swedish banks have improved their resilience, Riksbank said in a statement on Thursday.

"The financial markets have begun to function better and the recession appears to have bottomed out," the central bank said in its Financial Stability Report. "Loan losses in the bank system are therefore expected to be lower than was assessed in June."

However, the central bank noted that future developments are uncertain and the risks are still considerable. But, the banks have sufficient capital to meet larger losses than in the main scenario.

"The situation in the financial markets has improved and it has become easier for the major Swedish banks to obtain funding. At the same time, the prospects for their borrowers have improved," Riksbank governor Stefan Ingves said. He said future developments are uncertain as the recovery in the economy is from a very low level and parts of the financial markets are still not functioning as they were prior to the crisis.

Further, the report said credit risk is still the most prominent risk for the major Swedish banks, although this risk has declined slightly since June. The central bank expects commercial banks' loan losses to amount to a total of SEK 155 billion during the period 2009 to 2011.

Major Swedish banks have improved their resilience, Riksbank said in a statement on Thursday. "The financial markets have begun to function better and the recession appears to have bottomed out," the central bank said in its Financial Stability Report. "Loan losses in the bank system are therefore expected to be lower than was assessed in June." (Market News Provided by RTTNews)