The Swedish FSA (Finansinspektionen, or FI) on Tuesday proposed amending regulations on the countercyclical capital buffer (CCB) to raise it from 1.0% to 1.5%.

The Swedish FSA (Finansinspektionen) has published a methodology for assessing three types of risk under Pillar 2 – credit-related concentration risk, interest rate risk in the banking book, and pension risk – that will be used in capital requirements from the third quarter.

New Swedish mortgages originated from August must be amortised down to a LTV of 50%, under new regulation unveiled by the Swedish FSA that will be credit positive for Swedish cover pools, according to an analyst.

Swedish FSA proposals that new mortgage loans be amortised down to 50% of a property’s value according to a specified schedule would be credit positive for banks and covered bonds, according to Moody’s, but an industry representative suggested that implementation will be difficult.

The Swedish FSA announced details of tighter capital requirements today (Thursday), which market participants said provide welcome but only partial clarification of the capital regime in Sweden, with outstanding questions about Pillar 2 requirements obscuring the outlook for AT1 supply.

The Swedish FSA suggested increasing the risk weight floor for mortgages from 15% to 25% upon releasing its latest report on risks in the financial system today (Thursday), citing a very high level of household debt in Swedish households.

A proposal by Sweden’s FSA to oblige lenders to suggest mortgage loan amortisation plans to some borrowers could, if implemented, lead to increased paydown rates and eventually a possible decrease in target OC in some Swedish covered bond programmes, according to Standard & Poor’s.

Thomas Östros, managing director at the Swedish Bankers’ Association, spoke to Nordic FIs & Covered about the state of the Swedish banking sector, risks stemming from the NSFR, the potential for regulatory overreach, and more.

A joint council of Sweden’s Riksbank and Finansinspektionen has called for issuers to take the lead in releasing information relating to asset encumbrance after noting the potential risks of high levels of encumbrance, although they also highlighted the relative stability of covered bond funding.