Nordic Credit Rating said today that its 'BBB' long-term issuer rating on Resurs Bank AB (publ) was not affected by a decision by the Swedish Financial Supervisory Authority to fine the bank SEK 50m for historical underwriting breaches.
The fine follows an investigation by the FSA into Resurs Bank's underwriting practices in respect of certain loans applied for during 2019. The investigation found that the bank had not collected or incorporated adequate information about borrowers' other loans (in particular mortgage loans), living expenses, and income details. The FSA confined its response to a "remark" of censure but declined to issue a more serious warning or withdraw the bank's banking licence.
While our ratings on Resurs Bank are unaffected, the regulator's statement could negatively impact our view of the bank's risk governance. The bank has said it is in general disagreement with the penalty, but has committed to corrective actions to reduce the risk of further implications. Within its consumer banking peer group, the bank has a long-standing track record of modest risk appetite and solid underwriting performance. We take these factors into consideration in our rating and our assessment of the bank's credit risk and risk governance. We will continue to monitor the bank's response, particularly any future adaptation of its underwriting processes.
In our opinion, the FSA fine does not constitute a threat to Resurs Bank's financial standing despite a 7.5bp negative impact on its reported capital ratios. The impact considers consolidated risk weighted assets of SEK 33bn as of 31 Mar. 2022 and a dividend adjustment of 50% of net profit in the bank's regulatory capital base.
This commentary does not constitute a rating action.
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com