On 19 Mar. 2020, Swedbank received a final judgement from the Swedish financial supervisory authority (FSA) with respect to alleged money laundering activities at its Estonian branch. While the FSA believed that the regulatory breaches were serious enough to reconsider Swedbank's banking license, the regulator said that the bank's internal transformation and efforts to remedy the problems would be sufficient to prevent a repeat of such infringements. The bank was given a strongly worded warning and ordered to pay a SEK 4bn fine. Swedbank has accepted responsibility and will pay the fine without appeal.
Nordic Credit Rating (NCR) believes that the fine was largely priced into Swedbank's share price, but is of the opinion that the punishment and the uncertain effects and timeline of the corona virus will contribute to any decision by Swedbank to reduce or cancel its dividend for 2019. On 20 Mar. 2020, Swedbank postponed its Annual General Meeting and noted that it is still evaluating whether to go forward with its proposed dividend of SEK 8.80 per share for 2019.
In this analysis, NCR considers the impact of Swedbank's fine, share price and dividend decision on Sweden's savings banks. NCR has issuer ratings on Sparbanken Rekarne ('A-' and owned 50% by Swedbank) and Sparbanken Västra Mälardalen ('BBB+'), both are on stable outlooks.
This commentary does not reflect a rating action.
Analyst contact details:
Sean Cotten, +46 735 600 337, sean.cotten@nordiccreditrating.com
Geir Kristiansen, +47 907 845 93, geir.kristiansen@nordiccreditrating.com