Swedbank gets money back from Lehmans

Swedbank has reported a one-off $114m or SEK720m return from a repurchase agreement struck with Lehman Brothers shortly before the US bank filed for bankruptcy in late 2008.

The payment has been agreed by the US bankruptcy court supervising the Chapter 11 case involving the Lehman Brothers estate.

The matter relates to a $1.3bn repurchase agreement covering some 50 commercial real estate loans. Swedbank took possession of these loans shortly after the US bank’s bankruptcy was filed, and they were subsequently recognised on the Swedish bank’s books as part of its ordinary loan portfolio.

When the bankruptcy took place, Swedbank calculated a market value for the loans and then filed a collateral deficiency claim.

The agreement with the court means Swedbank obtains two approved non-secured claims against the Lehman Brothers estate in exchange for an undisclosed number of loans. It is this agreement that has led to the one-off pre-tax income of $114m reported today. The remaining loans linked to the original repurchase agreement amounted to $940m or SEK6bn as of 8 March, Swedbank said.

“We are very happy to have come to this agreement and having achieved positive financial outcome in relation to our Lehman repo loan exposure which benefits both the bank and our shareholders,” commented Swedbank’s chief risk officer Göran Bronner.

Swedbank has also reported a one-off loan recovery of SEK540m linked to improved credit quality of its credit portfolio in the Baltic states and Eastern Europe.

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