Requirements set and plans established for how Swedish banks are to be managed in a crisis

Press release 20 December 2017

The Swedish National Debt Office has formally decided on plans for how banks and other financial institutions are to be managed in a crisis situation and has also set their minimum requirements for own funds and eligible liabilities (MREL). The Debt Office’s current assessment is that ten institutions have business activities that are critical to the Swedish financial system, which means that the government will need to take control of them and manage them via so-called resolution in the event of their failure.

For those institutions deemed to have activities that are critical to the financial system, the Debt Office has prepared plans that outline the measures that the Debt Office intends to take in the event of resolution. The Debt Office has also set a minimum requirement which means those institutions must always have a certain amount of own funds and eligible liabilities that can be used in crisis management (MREL). This is a prerequisite for the government being able to implement a resolution without taxpayers having to bear the cost.

– Financial crises are often extremely costly to society. Being prepared to deal with failing banks properly is therefore key. With the plans and requirements now in place, we are even better equipped to manage a banking crisis in Sweden, says Hans Lindblad, Director General of the Debt Office.

Today’s decisions mean that the Debt Office intends to manage ten out of a total of 162 institutions via resolution during a crisis. In addition to the four major banks, this applies to Landshypotek, Länsförsäkringar, SBAB, Skandiabanken, Sparbanken Skåne and Swedish Export Credit Corporation. The Debt Office’s assessment is that the remaining institutions may be placed into bankruptcy or enter into liquidation proceedings without threatening financial stability.

The decisions concerning MREL are based on the policy statements made in the memorandum Application of the minimum requirement for own funds and eligible liabilities. The requirement applies from 1 January, 2018 and is already met by all institutions.

Institution(with business activities deemed critical for the financial system)Group MREL(percentage of total   liabilities  and own funds)Group MREL  (per cent of risk weighted assets)













Landshypotek Bank












Sparbanken Skåne



Swedish Export Credit Corporation



See Questions and answers about the Swedish National Debt Office’s decisions regarding the minimum requirement for own funds and eligible liabilities for more information on how MREL is calculated. The final MREL decisions are expressed as a per cent of the institutions’ total liabilities and own funds.  MREL expressed as a per cent of risk weighted assets is shown in the table for information only.

MREL to be met with subordinated liabilities

The MREL decision applies to the size of the capital base and stock of eligible liabilities that the institution must have at minimum. As previously communicated, the Debt Office also intends to apply a number of principles for how MREL is to be met and the characteristics the liabilities must have.

Liabilities proportion principle

The Debt Office has previously communicated that MREL should be met with a certain amount of debt instruments from 1 January 2018 (the liabilities proportion principle). In this manner, it can be ensured that there are sufficient debt instruments that can be written down and, if necessary, converted to capital if an institution fails.

For the six institutions – in addition to the four major banks – which have now been assessed as carrying out activities that are critical to the financial system, the Debt Office intends to apply the liabilities proportion principle from 1 July 2018.

Subordinated liabilities principle

By 1 January 2022 at the latest, MREL should be fully met with subordinated liabilities. This ensures a clearly-defined order of priority, which means that the subordinated liabilities are written down prior to other liabilities. In this manner, it is clear that investors in these subordinated liabilities will bear the costs after shareholders if an institution fails.

The subordinated liabilities principle applies to the four major banks as has been communicated earlier. For the other six institutions which, according to the Debt Office’s assessment, are to be managed via resolution, the Debt Office will revert during 2018 with information as to whether there are grounds to make exceptions from the subordinated liabilities principle.

Simplified planning for most institutions

For the 152 institutions that are expected to be able to be managed via a bankruptcy or liquidation process, the Debt Office has made decisions on so-called simplified resolution plans and set MREL at a level that does not exceed the applicable capital requirements.

Deposit insurance always applies

Irrespective of whether a financial institution is managed by resolution or bankruptcy, the deposit guarantee applies. This means that depositors’ funds are always protected up to an amount of SEK 950,000 per depositor and financial institution.

More information about resolution planning and MREL.


Robert Sennerdal, Press Secretary, +46(0)8 613 47 01


Since 1 February 2016, Sweden has had new rules for handling crises in banks, other credit institutions and investment firms (collectively ‘institutions’), which largely replace the bank support legislation from 2008. Under the new rules, the Swedish National Debt Office is the ‘resolution authority’ responsible for both crisis preparations and managing institutions in crisis. Resolution is a special procedure whereby the Debt Office takes control of a failing institution in order to restructure it or wind it up in an orderly manner. The aim is to protect customers, the financial system and public finances. The costs of resolution are borne by shareholders and investors, not by the taxpayers. The Debt Office therefore sets a requirement ensuring that the institutions always have a certain amount of own funds and liabilities that can be written down in order to cover losses and reinstate the own funds (MREL).