SWEDEN Trends and Developments Contributed by: Albert Wållgren, Henrik Ossborn and Lionardo Ojeda, Advokatfirman Vinge KB
ation and pricing of these assets. The introduc - tion of the NPL backstop rules has driven SRTs in this sector. At least two Swedish niche banks have performed NPL securitisations driven by the backstop rules. The upcoming changes to the EU banking regu - lations, which form part of the Basel III frame - work’s final implementation, include the possibil - ity for institutions specialised in acquisitions of NPLs to qualify as “Specialised Debt Restruc - turers”, and as a result to be exempt from the application of the backstop rules. So far, one Swedish institution has announced that it will follow this route. The EU Securitisation Regulation The EU Securitisation Regulation, effective from 1 January 2019, has significantly reformed the securitisation market in Sweden. Initially, the increased regulation created entry barriers for new issuers and introduced new requirements. However, over time, this regulation has led to a more sophisticated and coherent market, par - ticularly in areas such as reporting, transpar - ency, standardisation and risk retention. While the long-term effects remain to be seen, the regulation is expected to create a more stable and attractive market for international players. Other Recent Trends The Swedish securitisation market has tightened due to the general market downturn in 2022, leading to a “flight to quality” and increased focus on credit protection measures. Access to mezzanine financing has also been affected, with senior investors often willing to finance up to 80–90% of the asset pool, creating a fund - ing gap. Additionally, the market for arrears loan sales has seen a decrease in pricing and tighten - ing of terms, impacting on the financial stability of SPVs. The authors have also seen increased
interest from junior and mezzanine lenders, which could help bridge the funding gap cre - ated by senior investors’ limitations. The introduction of the General Data Protection Regulation (GDPR) in 2018 increased the focus on data processing and personal data handling. To ensure GDPR compliance, loan files and per - sonal data are usually encrypted, with decryp - tion keys held by a data trustee. The recent two years in particular have seen a rath - er rapid development towards more standardised documents in Swedish transactions. Structure and format are essentially based on what was seen in the reset of the European market. Looking Ahead: Banks to Offload Balance Sheets and STS The Swedish securitisation market has been relatively quiet regarding significant risk transfer (SRT) securitisations, NPL securitisations and other securitisations designed to offload bank balance sheets. However, new capital adequacy and accounting standards, along with the EU Securitisation Regulation, may make securitisa - tions more beneficial for banks. This area has been hindered by the SFSA’s view on flowback risk, but if mitigated could see increased activ - ity in the coming years. Additionally, there are indications that potential new rules relating to the classification of assets may drive the need for SRTs for banks in the eurozone. Interest in achieving a simple, transparent and standardised (STS) designation has been limited in the Swedish market. However, as the market matures and processes become more standard - ised, interest in the STS designation will likely grow.
416 CHAMBERS.COM
Powered by FlippingBook