Swedbank announces rights issue

17 August 2009

Swedbank is to issue new shares worth $2.1 billion in an attempt to raise further capital and boost its balance sheet.

The Swedish financial institution, which has been relying on government loans since 2008, said that the move will help to remove the impact bad debts in the Baltic region have had on its performance.

"It's a signal to our customers that we have the ability to support them through this recession, no matter what happens," chief executive officer Michael Wolf told Reuters.

However, the bank had said in June that it did not need to raise any more capital and reiterated this stance a month later, when it said its capital situation was resilient.

Mr Wolf explained that it has issued the right issue in spite of these comments so that it can prove to the market that it would be "well-capitalized" in the event of the $150 billion stress test scenario outlined by Sweden's central bank Riksbank occurring.

Shares in Swedbank fell by 4.17 per cent in Stockholm following the announcement.

Written By Tony Aynsley

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