Nordic Credit Rating (NCR) has affirmed its 'A-' long-term issuer rating on Sweden-based savings bank Sparbanken Mälardalen AB, formerly Sparbanken Rekarne AB (publ), following its merger with Sparbanken Västra Mälardalen (Sparbanken VM) (rating withdrawn). The outlook is stable. At the same time, the 'N2' short-term issuer rating, the 'A-' senior unsecured issue rating and the 'BBB+' issue rating on Tier 2 bonds were affirmed.
Rating rationale
The merger between Sparbanken Rekarne and Sparbanken VM was completed on 1 Sep. 2025. Sparbanken Rekarne remains the surviving legal entity and was renamed Sparbanken Mälardalen. We expect the merged bank to be among Sweden's largest savings banks, with a pro forma business volume of SEK 87bn as of 30 Jun. 2025. The bank will operate six offices across five municipalities, serving an area with a population of approximately 180,000.
We have raised our assessment of the bank's competitive position to reflect its increased size, diversification and the potential to better compete with larger banks for corporate customers due to a larger capital base. Our view of Sparbanken Mälardalen's capital position falls between our previous views for Sparbanken Rekarne and Sparbanken VM, resulting in an improved assessment for the merged bank. This reflects our estimate of a pro forma Common Equity Tier 1 (CET1) ratio of around 24% and total capital ratio of around 25% (as of 30 Jun. 2025), excluding Sparbanken VM's Swedbank shareholdings, which have been transferred to Sparbanken VM's owner foundation due to Swedbank's 30% ownership in Sparbanken Mälardalen. It also reflects our expectation that the merged bank will seek to utilise this capital for growth as well as its stated target of a 24% total capital ratio. We also revised our risk governance assessment downwards from Sparbanken Rekarne's standalone score, reflecting our expectation of increased pressure on administrative and organisational resources due to the merger.
We consider our assessment of the regional operating environment for the merged bank to be consistent with that of Sparbanken Rekarne. Our assessments of funding and liquidity, credit and market risk, earnings and loss performance are in line with our previous assessments for Sparbanken Rekarne and Sparbanken VM separately.
Sparbanken VM's sole outstanding senior unsecured bond is transferred to Sparbanken Mälardalen and assigned an 'A-' rating.
Stable outlook
The stable outlook reflects our expectation that the administrative aspects of the merger will proceed without significant disruption. We also expect the merged bank to maintain a moderate risk appetite as it pursues accelerated growth. Over time, we anticipate some cost benefits from the bank's increased scale, though we do not believe this was the primary motivation for the merger. We expect the operating environment in the region will remain stable, despite a continued mild recession in Sweden.
We could raise the rating to reflect improved economic conditions in the regional operating environment, combined with a commitment to a Tier 1 ratio above 22% over time and improvements to credit risk, either due to market characteristics or a change in dynamics in the loan book.
We could lower the rating to reflect a significant downturn in the regional operating environment, or to reflect a material change in risk appetite or asset quality. We could also lower the rating to reflect a Tier 1 ratio below 18%.
Related rating actions
i) Sparbanken Västra Mälardalen long-term issuer rating raised to 'A-' and withdrawn following merger with Sparbanken Rekarne, 1 Sep. 2025
ii) Sparbanken Rekarne AB (publ) 'A-' long-term issuer rating affirmed; Outlook stable, 27 Jan. 2025
iii)Sparbanken Västra Mälardalen 'BBB+' long-term issuer rating placed on watch positive, 27 Jan. 2025
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A- | A- |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | A- | A- |
| Tier 2 issue rating: | BBB+ | BBB+ |
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@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.