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.

A move by Finnish banks to allow households amortisation-free periods on their mortgages free of charge is a short term boon for Finland’s economy, but could pose a long term risk to the banking system, Moody’s warned on Monday.

Negative interest rates will squeeze Swedish banks’ margins and reduce their profitability, Moody’s said on Monday, after Sweden’s central bank reduced its repo rate from 0.0% to negative 0.10% on February 12.

A partial waiver from certain CRR requirements proposed by the Swedish FSA to reduce concentration risk would be credit positive for Swedish covered bonds, according to Moody’s, as it would allow programmes to maintain protections against market risks.

Moody’s has kicked off the new year with yet another significant change to its covered bond methodology, as the rating agency intends to change its anchor point for the second time in less than 12 months to incorporate the Bank Recovery & Resolution Directive (BRRD).

Moody’s expects Swedish banks to make early, sizeable issuances of Additional Tier 1 (AT1) instruments, while Standard & Poor’s expects a similar trend across Nordic banks, which it said are pulling away from their European peers in terms of capital strength.

Moody’s upgraded Danske Bank from Baa1 to A3 last week, citing as the main driver continued improvement in the Danish bank’s profitability, with reduced refinancing risk in its mortgage credit operations another factor.

Norway came top out of six countries in a Moody’s ranking of how strong different jurisdictions are with respect to eligibility criteria for cover pool assets based on a combination of covered bond law and market practice, while Sweden was first taking into account only the covered bond law.

Moody’s upgraded Eika Boligkreditt mortgage covered bonds from Aa2 to Aa1 on Thursday of last week.

Amortisation of new mortgage loans down to 50% of a property’s value in line with a Swedish Bankers’ Association recommendation on Tuesday of last week (7 October) would be beneficial, according to Moody’s, while an analyst suggested it could head off further binding measures from Sweden’s authorities.