January 28, 2020 / 8:25 AM / in a month

Swedish FSA raises buffers for banks' commercial property lending

STOCKHOLM, Jan 28 (Reuters) - The Swedish Financial Supervisory Authority said on Tuesday it would raise capital requirements on bank loans for commercial real estate, citing elevated risk in the exposure.

The FSA said the increase would primarily affect Sweden’s three major lenders, with the additional capital requirement estimated at 5 billion Swedish crowns ($526.48 million) for each bank.

The FSA set the risk weight at 35% for corporate exposures collateralised by commercial real estate and 25% for corporate exposures collateralised by commercial residential properties.

The real estate market is widely seen as the biggest risk to Sweden’s otherwise stable economy, with more than 75% of all bank lending going to the sector through both lending to property companies and mortgages to households.

The FSA had flagged the increase in November. ($1 = 9.4970 Swedish crowns) (Reporting by Stockholm Newsroom) ))

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