SWEDEN Trends and Developments Contributed by: Niklas Sinander, Elin Carlsson, Axel Schelén and Björn Wendleby, Harvest Advokatbyrå
To implement CRD VI, the Swedish Ministry of Finance ( Finansdepartementet ) issued a memorandum on 30 May 2025 proposing legislative amendments. These include a requirement that third-country institutions wishing to provide core banking services from a branch in Sweden must obtain branch authorisation, and will be subject to special supervision. The SFSA shall grant authorisation if certain require- ments are met, including: • sufficient capital and liquidity; • adequate risk management and documentation; • satisfactory internal control; and • valid home country authorisation and adequate home country supervision (which shall also be informed of the establishment in Sweden). The branch’s activities outside Sweden, but within the European Economic Area (EEA), shall be limited to financing branches within the same group. The SFSA shall also assess whether effective supervision can be exercised, and whether the operations could be asso- ciated with, or increase the risk of, money launder- ing or terrorist financing. Finally, deposits with third- country branches shall be covered by the Swedish deposit guarantee or by an at-least equivalent foreign guarantee. In light of the above, it is proposed that the cur- rent licensing regime under the Banking Act for for- eign credit institutions outside the EEA be repealed. Instead, the requirements under Article 21c CRD VI concerning branch licensing will be incorporated into the Swedish Special Supervision of Credit Institutions and Securities Companies Act (SFS 2014:968). Proposals to Ease Mortgage Caps and Amend Repayment Requirements While consumer protection has been tightened in the area of high-cost short-term credit, a parallel review of borrower-based macro-prudential measures for mort- gages is ongoing. The aim is to lower the thresholds to the housing market and strengthen households’ liquidity buffers.
In April 2023, a government committee was tasked with reviewing (inter alia) the mortgage cap and amortisation requirements. The Swedish Ministry of Finance presented a memorandum (Fi2025/01375) in June 2025 with proposals for consultation which, if adopted, are proposed to enter into force on 1 April 2026. The key proposals are: • raising the mortgage cap from 85% to 90% of the market value of the property; • lowering the maximum permitted total loan-to- value ratio to 80% for additional credit on existing mortgages; • abolition of the stricter amortisation requirement (additional 1 percentage point for debt ratios above 4.5), while other amortisation rules remain unchanged – at least 1% per year for loan-to-value ratios of 50% to 70% and at least 2% per year above 70%; and • transfer of the regulation of mortgage caps and amortisation requirements from the SFSA’s regula- tions to law, for greater clarity and predictability. The SFSA has analysed the effects of the mortgage cap. In a report from 22 February 2024 concerning the SFSA’s view on raising the mortgage cap from 85% to 90%, the SFSA noted that unsecured loans have likely played a significant role in housing finance for certain borrower groups since the introduction of the cap in 2010. Between 2009 and 2018, annual new lending of unsecured loans exceeding SEK50,000 by niche banks increased from approximately SEK3 billion to SEK24 billion. Given that unsecured loans are typi- cally more expensive than secured housing loans, this development may undermine consumer protection. Several banks and industry representatives welcome measures that facilitate entry for young people and first-time buyers. At the same time, the SFSA (among others) has expressed concerns about increased indebtedness and rising house prices, with potential risks to financial stability. Many parties also empha- sise the need for long-term measures on the supply side – not least, increased housing construction – to address the fundamental problems in the market.
600 CHAMBERS.COM
Powered by FlippingBook