Focus Report: Measuring the costs to creditors to the major Swedish banks in the event of crisis

Marianna Blix Grimaldi and Johan Linder, economists at the Swedish National Debt Office (Riksgälden), analyses in a Focus Report, Measuring Bank Resolution Costs, the costs to creditors of the major Swedish banks in the event of bank failure.

The report shows that the costs to creditors of the major Swedish banks in the event of failure has declined markedly since the financial crisis in 2008. Two factors explain the decline in costs in Sweden as well as those costs being lower relative to other comparable EU countries: a high level of own capital and real growth in the economy.

The Bank Resolution and Recovery Directive that came into force in 2014 was also significant. It had a dampening effect on the costs that creditors to European banks would have to shoulder in the event of a financial crisis. The directive was a milestone to improve regulation for the banking sector with the goal of strengthening financial stability and ensure that tax payers do not have to foot the bill.

Before the directive came into force countries used implicit bank guarantees and ad hoc rescue packages to prop up their banks. The report does not consider such actions taken before the directive came into force.

Focus Report: Measuring bank resolution costs.

Contact

Marianna Blix Grimaldi, Economic Analysis (tel: +46 8 613 46 60).

Johan Linder, Risk Division, (tel: +46 8 613 45 76).