The concern for Swedish banks is visible in the data, according to Paul Diggle, deputy chief economist at the British asset manager Abrdn.
– We see that Swedish bank shares are some of the most shorted right now, he says.
The purpose of short selling is to be able to make money from a share falling in value. Some investors therefore believe that Swedish bank shares will fall in value.
– I think one reason is Sweden’s high loan-to-value ratio and the large proportion of borrowers who borrow at variable interest rates. It creates a great sensitivity when interest rates rise, says Paul Diggle.
Headwinds if the interest rate is raised
Another reason for investors’ speculation is the Riksbank’s actions. If the authority continues to raise interest rates to bring down inflation, it will further hit Swedish companies, banks and households.
– It can spread the problem and the banks can find themselves in a headwind, says Paul Diggle.
Henrik Braconier, chief economist at the Financial Supervisory Authority, is not particularly worried about the Swedish banks, but agrees that Sweden is sensitive to interest rate changes.
– We have tougher regulation than in the US and Switzerland, especially regarding interest rate risks. But as a whole, our banking system is resilient, he says.
See the latest section of the Financial Services Agency “Bank bubbles” on SVT Play.