UPDATE 1-Swedish banks pass “extreme” stress test – watchdog


* Swedish watchdog: banks can handle the worst-case scenario

* Says banks can absorb SEK 150 billion in losses in Baltic states

* Does not see the need for capital strengthening by the big banks

(Add details, background)

STOCKHOLM, June 10 (Reuters) – The Swedish financial watchdog said on Wednesday that the Nordic country’s major banks would all be able to handle the “extreme” pressures created by a severe recession in Sweden and the Baltic region.

The Swedish Financial Supervisory Authority has said that its stress tests of the four major banks – Nordea NDA.ST, SEB SEBa.ST, Handelsbanken SHBa.ST and Swedbank SWEDa.ST – showed that they could absorb losses of over 150 billion Swedish kronor ($ 19.7 billion) in the Baltic countries over three years.

This was the worst-case stress testing scenario.

“There is currently no need for any of the big banks to strengthen their capital adequacy based on regulatory requirements,” he said in a statement.

“However, in extreme scenarios, the market will most likely demand a higher level of capital, which can put pressure on the funding possibilities of the most affected banks.”

Financial supervision said it tested three scenarios for the period 2009-2011, ranging from total credit losses of around 200 billion crowns to around 350 billion, involving huge losses in the activities of banks abroad.

Swedish banks have stayed away from risky assets that have devastated many of their peers on both sides of the Atlantic, but concerns have grown over the billions of dollars in loans made mostly by Swedbank and SEB in the Baltic states. , which are in the hands of a sharp recession.

For a box on the exposure of Nordic banks in the Baltic Sea region, click on [ID:nLS339434]

For a survey on Nordic bank loan losses, click [ID:nL41028605] (Edited by Will Waterman)

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