Nordic Credit Rating (NCR) has affirmed its 'BB+' long-term issuer rating on Sweden-based Norion Bank AB (publ). The outlook is stable. The 'N4' short-term issuer rating, the 'BB+' senior unsecured issue rating and the 'BB-' Tier 2 issue rating have also been affirmed, in accordance with NCR's revised financial institutions rating methodology. The bank currently has no outstanding Additional Tier 1 instruments, but we would expect to rate such instruments 'B'. The ratings are no longer under criteria review.
Rating rationale
NCR has reviewed its long-term and short-term issuer ratings, issue ratings, and outlook on Norion Bank following the revision of its methodology for assigning ratings to financial institutions (see Related publications). We consider that our amendments to the methodology have not had a material impact on our view of the bank's creditworthiness, and that there have not been significant changes in its overall risk profile. Consequently, we have affirmed our ratings and maintained the stable outlook on the ratings on Norion Bank.
Fastighets AB Balder, the bank's largest shareholder, plans to distribute its 44.1% stake in Norion Bank to its shareholders as a dividend. We expect the transaction to proceed only if Balder's credit metrics and credit rating remain unaffected. Consequently, the timing of the transaction is uncertain. We will monitor the ownership situation and assess the potential long-term impact of this change on our view of the bank's ownership profile and ratings.
Stable outlook
The stable outlook reflects our view that Norion Bank will maintain its capital ratios and reduce the proportion of Stage 3 real estate lending, supported by its strong earnings. The outlook also reflects our expectation that the bank will limit further increases in related-party exposures and focus on expanding its core business outside the sphere of its ownership group. A higher rating is unlikely until we see clear signs of sustainable balance sheet improvement, greater transparency, and stronger internal limits to manage conflicts of interest.
We could raise the rating to reflect an improvement in transparency and management of conflicts of interest and related-party exposures or material reduction in downside risk associated with Stage 3 loans.
We could lower the rating to reflect a Tier 1 ratio below 15% over a protracted period, a lasting increase in loan-loss provisions above 4% of net lending, or material expansion of related-party exposures in relation to common equity Tier 1.
Related publications
i) NCR comments: Norion Bank ’BB+’ rating unchanged following Balder proposal, 25 Mar. 2025.
ii) Norion Bank 'BB+' long-term issuer rating affirmed; Outlook stable, 7 Mar. 2025.
iii) Nordic Credit Rating publishes amended Financial Institutions Rating Methodology, 12 May 2025.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BB+ | BB+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N4 | N4 |
| Senior unsecured issue rating: | BB+ | BB+ |
| Tier 2 issue rating: | BB- | BB- |
| Additional Tier 1 issue rating: | B | B |
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
The methodology documents used for this rating are NCR's Financial Institutions Rating Methodology published on 12 May 2025, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.