Swedish Banks Should Ignore Moody’s, Swedbank CFO Says
May 23, 2012 5:31 AM EDT
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Sweden’s banks, among the best rated in Europe, shouldn’t pay too much attention to Moody’s Investors Service because the rater’s assessments tend to be outdated, Swedbank (SWEDA) AB Chief Financial Officer Goran Bronner said.
“Moody’s in general is very backward looking; they are often stating things that are well recognized from the financial community for a long time,” Bronner said in response to Bloomberg questions in Stockholm today. “I don’t think Swedish banks should put any particular emphasis on it.”
Denmark, which holds the rotating European Union presidency, said this week it won backing in the 27-member bloc to reduce the dominance of rating companies as Moody’s prepares to downgrade lenders across Europe. The Danish proposal seeks to dilute the impact of ratings within regulatory frameworks and give investors and issuers better access to seeking compensation if raters don’t comply with existing rules.
“For Swedish banks Moody’s has a limited effect,” Bronner said. “Spreads have tightened since the downgrade came up for discussion.”
Moody’s, which in February said it is reviewing 114 European lenders for possible downgrades, is likely to provide its view on Sweden’s banks this week or next, Bronner said. A number of the Nordic country’s lenders will probably suffer downgrades, though Swedbank is likely to be spared because the bank has strengthened its credit profile since its latest ratings cut, he said.
Swedbank is rated A2 at Moody’s. The cost of insuring against a default at Swedbank fell close to a seven-month low in March and was at 203.5 basis points yesterday, credit-default swaps show. That’s 27 percent lower than the Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 European banks and insurers.
Firing Moody’s
In Denmark, banks have started firing Moody’s after winning assurances from some of the country’s biggest investors that the opinions of ratings companies hold limited value. Nykredit A/S, Denmark’s biggest mortgage lender and Europe’s largest issuer of covered bonds backed by home loans, terminated its contract with Moody’s last month, citing its “volatile” views. Danske Bank A/S Chief Executive Officer Eivind Kolding in an interview this month criticized Moody’s view on systemic support, less than a year after the bank’s mortgage arm sacked the company.
“It is hard for” rating companies “to keep track and when you come close to them it is quite apparent they have difficulty following everything that is happening elsewhere,” Bronner said. “The key is more transparency and then the market can decide.”
May 23, 2012 5:31 AM EDT
facebook twitter
Sweden’s banks, among the best rated in Europe, shouldn’t pay too much attention to Moody’s Investors Service because the rater’s assessments tend to be outdated, Swedbank (SWEDA) AB Chief Financial Officer Goran Bronner said.
“Moody’s in general is very backward looking; they are often stating things that are well recognized from the financial community for a long time,” Bronner said in response to Bloomberg questions in Stockholm today. “I don’t think Swedish banks should put any particular emphasis on it.”
Denmark, which holds the rotating European Union presidency, said this week it won backing in the 27-member bloc to reduce the dominance of rating companies as Moody’s prepares to downgrade lenders across Europe. The Danish proposal seeks to dilute the impact of ratings within regulatory frameworks and give investors and issuers better access to seeking compensation if raters don’t comply with existing rules.
“For Swedish banks Moody’s has a limited effect,” Bronner said. “Spreads have tightened since the downgrade came up for discussion.”
Moody’s, which in February said it is reviewing 114 European lenders for possible downgrades, is likely to provide its view on Sweden’s banks this week or next, Bronner said. A number of the Nordic country’s lenders will probably suffer downgrades, though Swedbank is likely to be spared because the bank has strengthened its credit profile since its latest ratings cut, he said.
Swedbank is rated A2 at Moody’s. The cost of insuring against a default at Swedbank fell close to a seven-month low in March and was at 203.5 basis points yesterday, credit-default swaps show. That’s 27 percent lower than the Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 European banks and insurers.
Firing Moody’s
In Denmark, banks have started firing Moody’s after winning assurances from some of the country’s biggest investors that the opinions of ratings companies hold limited value. Nykredit A/S, Denmark’s biggest mortgage lender and Europe’s largest issuer of covered bonds backed by home loans, terminated its contract with Moody’s last month, citing its “volatile” views. Danske Bank A/S Chief Executive Officer Eivind Kolding in an interview this month criticized Moody’s view on systemic support, less than a year after the bank’s mortgage arm sacked the company.
“It is hard for” rating companies “to keep track and when you come close to them it is quite apparent they have difficulty following everything that is happening elsewhere,” Bronner said. “The key is more transparency and then the market can decide.”