Sweden's Banks Need Money, Too

Sweden is often cited as the best example to follow when it comes to banking crises. Early in 1990, after a number of pressures on the real estate bubble, the company pulled the rug out from under the financial sector, the Swedish government quickly forced banks to write down their assets, press the state for capital and sell assets to pay back the taxpayers. But the current crisis is far from that bad for Sweden's banks, economic slow down in the Nordic and Baltic states pressing banks to SEB - and now Nordea - the capital again.

Tuesday, after reporting a disappointing decline in fourth quarter net profit of 25.2%, to 637 million euro ($ 820.9 million), Swedish lender Nordea (other-OTC: NRDEF - news - people) was the last to suggest a right-based issues to raise cash. The bank looks for 2.5 billion euro ($ 3.2 billion) in capital from shareholders, and said it would cut its dividend policy to add a further 500 million euro ($ 644.3 million) to the pot. It has already received assurances from the three largest shareholders - the Swedish government, Sampo and Nordea Fund - to 49.0% of the rights issue will be addressed. JPMorgan Chase and Merrill Lynch will guarantee the rest.

The notice came nearly a week after rival SEB said that it would make an extra 19.5 billion Swedish kronor ($ 2.4 billion), which combines a 15 billion kroner ($ 1.8 billion) rights issue and withdrawal of benefits. Swedbank (other-OTC: SWDBY - news - people), which has the largest exposure to the recession-plagued by the three Baltic states, raised 12.4 billion ($ 1.5 billion) last year. Shares in Nordea fell 5.6%, or 2.90 kroner (35 cents) to 48.60 kroner ($ 5.94) during morning trading in Stockholm. SEB fell 5.0% to 47.20 kroner ($ 5.77).

"There is a risk that it will be so much supply of rights, that investor appetite may decrease," said Matti aHøk, an analyst in Handelsbanken Capital Markets. But the one positive factor is all the [Scandinavia] governments have said they will participate in the market. Such limit problem. "Sweden's banks are still better placed than their western counterparts when it comes to surviving the economic downturn. Handelsbanken's aHøk expected the Swedish government to maintain, rather than increase its 20.0% stake in Nordea, and Tuesday the Swedish financial market, "Minister reiterated the government's desire to reduce its stake in Nordea last.

Bank board in Sweden-

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