Fitch cuts five Swedish banks’ support ratings

Fitch Ratings said it downgraded five Swedish banks' support ratings to 5 from 2 and revised their support rating floors to “no floor” from BBB-.

The affected banks are Nordea Bank AB, Skandinaviska Enskilda Banken AB, Swedbank AB, Svenska Handelsbanken AB as well as its main subsidiary Stadshypotek.

The banks' other ratings are unaffected.

Fitch said the action follows the Feb. 23 publication by the Swedish resolution authority of the banks' minimum requirements for own funds and eligible liabilities (MREL). The requirements introduce a minimum debt component that cannot be met with capital instruments.

In the agency’s view, this introduces a sufficient framework for resolving banks that require senior creditors participating in losses, if necessary, instead or ahead of a bank receiving sovereign support.

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