Nordic Credit Rating (NCR) has affirmed its 'BBB+' long-term issuer rating on Sweden-based savings bank Sparbanken Västra Mälardalen. The ratings are on watch positive awaiting the finalisation of its merger with Sparebanken Rekarne. The 'N3' short-term issuer rating and the 'BBB+' senior unsecured issue rating have also been affirmed, in accordance with NCR's revised financial institutions rating methodology. 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 Sparbanken VM 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 positive watch placement on the ratings on Sparbanken VM.
The watch placement reflects our expectations that the bank's merger with Sparbanken Rekarne will be completed by Q4 2025, after which the long-term issuer rating is likely to be increased to 'A-' in line with our rating on Sparbanken Rekarne. Approval from the Swedish Financial Supervisory Authority (Finansinspektionen) is required, which we consider likely given recent approvals of similar mergers between Swedish savings banks. The Swedish Competition Authority (Konkurrensverket) gave its approval on 30 Apr. 2025.
Stable outlook
The watch placement reflects our view that Sparbanken VM's merger with Sparbanken Rekarne, currently rated 'A-' by NCR, would create a stronger bank. The merged entity would gain a larger market with better growth prospects, an enhanced competitive position, and greater business diversity. Additionally, we anticipate the merger would diversify the bank's risk profile and exposures, thereby reducing geographic credit risk concentrations. We also recognise the advantage of adding a strong owner like Swedbank to the ownership group. We expect to resolve the watch placement upon notice of all necessary approvals, or if the merger agreement is terminated.
We could raise the rating to reflect approval of the merger from Sparkbanken VM's principal representatives and the relevant authorities and confirmation that the merger will take place.
We could affirm the rating and assign a stable outlook if the transaction is not approved as we expect, or it is otherwise terminated.
Related publications
i) NCR Comments: Ratings for Swedish savings banks unchanged after Swedbank's revised dividend policy, 29 Jan. 2025.
ii) Sparbanken Västra Mälardalen 'BBB+' long-term issuer rating placed on watch positive, 27 Jan. 2025.
iii) Nordic Credit Rating publishes amended Financial Institutions Rating Methodology, 12 May 2025.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB+ | BBB+ |
| Watch: | Watch Positive | Watch Positive |
| Short-term issuer credit rating: | N3 | N3 |
| Senior unsecured 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.