Housing dip could knock the Nordics
As European banks are recovering, Nordic banks are facing perhaps their biggest challenge since the 2008 crisis. Their time as the darlings of the sector may be over
How refreshing to see crates of knobbly apples handed out in the lobby when I visited Sweden’s financial supervisor in early November. Alas, the harvest season was also coming to an end for investors in Scandinavia’s falling bank shares.
Are Sweden’s notoriously tough capital charges, I ask, a result of greater systemic risk here?
The Finansinspektionen’s executive director for banking, Martin Noréus, suggests not. Rather, he says, it has been easier to implement them because his sector is exceptionally profitable. Nevertheless, he says, high requirements reflect a period of rapid credit growth, when risk has been perceived to be very low – particularly in the mortgage market.
For banks and their investors that means time to take stock, as worries grow about an end to a 20-year-long house-price boom only moderately interrupted by the 2008 global crash.
Swedish apartments are being sold at their highest rate since the late 1990s, according to Bloomberg, while Sweden’s widely followed Nasdaq OMX Valueguard-KTH Housing Index (HOX) is falling faster than at any point since 2008, down 3% in the month to the middle of November.
It’s not just Sweden.