Nordea Bank rejects lack of capital speculations

Bloomberg

Scandinavia’s biggest bank said it has more than enough capital to meet regulatory requirements following a report it may need to turn to markets to fill an alleged shortfall.
Nordea Bank AB said on Tuesday it had a common equity Tier 1 capital ratio of 16.7 percent in March, exceeding the 15.6 percent requirement set by the Financial Supervisory Authority. The bank also met its requirements in May, the watchdog said.
“We’re very confident in our ability to fulfill the capital requirements without additional capital,” Chief Executive Officer Casper von Koskull said in a statement, calling the overnight media report “highly speculative.”
Newspaper Svenska Dagbladet reported overnight that a document written by an analyst at the FSA in Stockholm shows Nordea has a capital shortfall of as much as 80 billion kronor (US$9.7 billion) after the bank underestimated the risk in its corporate loan portfolio. Svenska Dagbladet didn’t see the document but cited people it didn’t identify by name who told the newspaper its contents.
Nordea had a total capital requirement of 265.8 billion kronor in the first quarter, according to a June 16 FSA statement. That includes minimum requirements, buffers and risk weight floors on mortgages in
Sweden and Norway.
The FSA earlier this year imposed tougher requirements for banks using internal models to determine the risk weighting of corporate assets. The agency said it expects to have completed an assessment of capital needs in September. As of May 26, Sweden’s biggest banks all met the country’s capital requirements with margins, it said.
The regulator “is currently assessing the banks’ internal models and through its dialogue with them is looking into risk weights on corporate assets,” it said. “The FSA has previously concluded that this assessment will result in higher capital requirements.”

For Nordea’s part, any additional requirements “will be significantly lower” than those mentioned in the SVD article, it said.
The developments sent shares in Nordea down by as much as 2.9 percent in Stockholm. It was down 1.3 percent to 78.10 kronor as of 9:48 a.m. local time.