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SWEDBANK 'AA+' CDs, 'F-1+' CP ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --

 SWEDBANK 'AA+' CDs, 'F-1+' CP ON FITCHALERT NEGATIVE
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Jan. 29 /PRNewswire/ -- SwedBank's "AA+" certificates of deposit and "F-1+" commercial paper are placed on FitchAlert with negative implications.
 Sweden has applied for membership and is expected to be accepted into the European Community (EC) by 1995. New economic policies being adopted to integrate the country into the EC continue to create challenges for the Swedish financial and corporate sectors.
 In a two-step reorganization, SwedBank, whose ordinary shares are owned by a holding company, proposes to purchase the shares of ten savings banks from the same holding company. When the purchases are completed, the holding company will make a capital injection in SwedBank. The existing ordinary shares of SwedBank will be transferred to ten foundations and the 90 independent savings banks which are the current shareholders of the holding company. SwedBank also proposes to acquire the shares of Sparbanken Forsta AB, an ailing savings bank that has required governmental intervention. The purchase of shares in Forsta and the other savings banks will be contingent on discussions with the Ministry of Finance. The new legal entity to emerge will be named domestically Sparbanken Sverige AB, and will be known internationally as SwedBank. It will consist of SwedBank, the ten savings banks, and Sparbanken Forsta. SwedBank's current organization will remain intact until Jan. 1, 1993, when the new entity will begin operations. The status of SwedBank's mortgage subsidiary, Spintab, will be unchanged.
 Fitch will focus on several key concerns which could affect SwedBank's ratings. Capital adequacy of the new organization will be examined closely. SwedBank's capital ratios have been strong (nearly 20 percent equity to assets), providing a solid cushion against rising credit losses. However, two other savings banks, including Sparbanken Forsta AB, have had weaker capital and significantly higher losses. The loan quality of other savings banks will be a factor in Fitch's review. Stronger consolidated capital ratios will also be an issue because of the need to capitalize SwedBank's mortgage subsidiaries. Management expects to raise new equity to maintain an estimated BIS capital ratio of at least 9.5 percent.
 The new company's cashflows and debt servicing capacity will be of continued importance. At this time, it is difficult to estimate amounts of consolidated debt and projected funding needs.
 Finally, the new organization's role and competitive position will be reviewed since SwedBank's unique function as the Swedish clearer for savings banks, and as the specialized wholesale arm of the savings bank sector, appear to be diminishing. However, SwedBank will have approximately $100 billion in total assets, controlling about 85 percent of the Swedish savings bank sector, and will be the largest bank in the Nordic region.
 -0- 1/29/92
 /CONTACT: Fay Y. Wong, 212-908-0531, or Ricardo J. Kleinbaum, 212-908-0525, both of Fitch/ CO: SwedBank ST: IN: FIN SU: RTG


GK -- NY075 -- 4856 01/29/92 15:34 EST
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Publication:PR Newswire
Date:Jan 29, 1992
Words:482
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