Swedish regulator hits banks with early buffer demands

The Swedish Financial Supervisory Authority (Finansinspektionen) has decided not to wait for an EU schedule, instead proposing an earlier introduction of stricter liquidity buffer requirements for domestic banks and other credit institutions, which would apply as of 1 January 2013.

The buffers are based on liquidity coverage ratios, which mean banks’ liquid assets must manage outflows over a period of 30 days of market stress.

“The requirement is based on guidelines from the international Basel Committee on Banking Supervision regarding a Liquidity Coverage Ratio (LCR), which are planned to be introduced within the EU during 2015,” FI said.

Additionally, FI wants the levels of liquidity buffers to be made public, although it stresses that the coverage ratios relate to periods when the buffers are not being used: banks under stress that affects liquidity are not required to meet the ratio requirement.

Any company with a balance sheet as of 30 September the previous year that is greater than SEK100bn (€12bn) would be affected.

The regulation would apply at group level, not for individual companies within a group. Currently some eight companies would be affected, FI said.

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