Baltic lender Swedbank’s A1 senior debt and deposit ratings and C- bank financial strength remain on review for possible downgrade by Moody’s despite the bank’s plans to bolster its balance sheet with a SEK15bn (US$2bn) rights issue.
In a note, Moody’s says that the bank’s capital increase will be seen as a positive element that increases its ability to cope with expected losses under the rating agency’s scenario analysis. But it added that it will also take into account Swedbank’s higher expected losses due to the continuing deterioration of the macro-economic conditions in the Baltic countries and Ukraine and worsened economic conditions in Sweden.
The rating agency expects to conclude its review of Swedbank in the coming weeks.
Swedbank says the rights issue – its second since the end of 2008 – will lessen its reliance on the Swedish government’s state guarantee scheme and strengthen its capital base. The terms of the rights issue will be announced on September 14.
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