The Swedish Financial Supervisory Authority (FI) published a report on the Swedish mortgage market in 2023, imposed a sanction or penalty fee of SEK 850 million on Swedbank for lack of internal control during a change in a system-critical IT system, and updated the list of validation rules from the European Banking Authority (EBA) for periodic reporting, via Fidac, for banks and investment firms.
The mortgage report analyzes developments in the mortgage market using a sample of new mortgage borrowers who took out a new mortgage in early autumn 2022, and where the housing deal was often completed in the summer of 2022 or earlier. The report highlights that mortgage borrowers are under pressure from the economic situation where both interest rates and inflation have risen sharply. For many households, interest has become an increasingly large expense, and for new mortgage borrowers, an average of 12% of disposable income goes to interest payments, which is almost a threefold increase from 2021. The report predicts that the interest payments may increase to nearly 16% of disposable income by the end of 2023. The report also indicates that vast majority of new mortgage borrowers still have good margins in their personal finances. Thus, FI has taken several measures, for example amortization requirements and mortgage ceilings, to reduce the risks with household loans that enables them to borrow less and buy cheaper homes. However, for households that find it difficult to get their finances together, banks have the option to grant exemptions from the amortization requirement, a so-called valve. From September 2022 to the end of February 2023, approximately 15,000 mortgage customers have received a temporary exemption from the amortization requirement. Moreover, FI has been currently mapping how the banks apply the valve and will report the final results in June 2023.
Penalty on Swedbank. FI imposed a sanction fee of SEK 850 million, following a major IT incident at Swedbank in connection with the bank making a change in a system-critical IT system. The investigation revealed that Swedbank failed to carry out proper risk and impact analysis, thereby violating central rules on internal control. This contributed to a very large number of people having extensive problems managing their basic banking services. FI also assessed that the sanction does not endanger the bank's current operations, or its customers and the bank is well capitalized, profitable and has a good liquidity coverage ratio.
Related Links (in English and Swedish)
Keywords: Europe, Sweden, Banking, Lending, Mortgage Lending, Credit Risk, Validation Rules, Interest Rate Risk, Swedbank, IT Risk, Internal Controls Failure, Reporting, EBA, FI
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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