How much capital do banks need?

Apr. 26, 2016

Swedish banks are well capitalized, in an international perspective but there can still be improvements. That was the agreement of the panelists at a SIFR / SNS Finanspanel on March 9.

Erik Thedéen Director General of FI, Martin Flodén Deputy Governor of the Riksbank, Hans Lindberg CEO of the Swedish Bankers’ Association and Per Strömberg Professor of Finance and Private Equity from Stockholm School of Economics joined forces at a SIFR/SNS Finanspanel to discuss how much capital banks need. The seminar was well received.

Erik Thedéen said that it is important not to sit back and relax but to prepare for the worst. It is possible that FI will introduce tougher demands on banks if they do not improve their own internal risk models. In particular argued Erik Thedéen, banks need to add more “weak years” to their models in order not to underestimate risks associated with credit losses. Hans Lindberg asked for a regulatory framework that looks more to the big picture than what the current frame- work does.