Nordic Credit Rating 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 has also been affirmed, as have the 'BB+' senior unsecured issue rating and the 'BB-' Tier 2 issue rating. The bank currently has no outstanding Additional Tier 1 instruments, but we would expect to rate such instruments 'B'.
Rating rationale
The long-term rating reflects the bank's elevated risk appetite and our increasing concerns about its management of conflicts of interest and related-party lending. We also view single-name risk in the real estate and corporate loan book as a risk factor given the high proportion of Stage 3 non-performing loans. We have incorporated a notch of peer adjustment into the long-term-issuer rating to reflect these risk factors.
The rating is supported by Norion Bank's strong risk-adjusted earnings, varied loan exposures, access to diverse funding sources, and robust capital position. We expect the bank to grow across all business segments, including Nordic consumer loans and payments, real estate and mide-sized corporate lending. We believe the bank's increased liquidity buffers has improved the bank's overall funding and liquidity resilience.
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.
| 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 |
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 14 Feb. 2024, 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. NCR - Norion_Bank_AB_publ - Full Rating Report 7 Mar. 2025.pdf (469.8 KB) NCR - Norion_Bank_AB_publ - Rating Action Report 7 Mar. 2025.pdf (137.37 KB) Norion Bank AB (publ) BB + Stable Financial N4 Off On Off