Swedbank Risks Getting A Worse Credit Rating
Swedbank risks getting a worse credit rating. The bank must now implement concrete measures to restore confidence while at the same time much else must go the bank’s path, otherwise the credit rating can be reduced.
It would risk making it more expensive for the bank to borrow, which in turn could be a risk that it would also be more expensive for the bank’s customers.
It is after the charges against Swedbank for money laundering in the Baltics and that the bank must also have withheld information from US authorities that the credit rating agency S&P placed the bank on an “observation list”. In the long run, a lower grade may mean that it becomes more expensive for the bank to borrow money.
Rating affects the cost of the bank
S&P is one of the leading credit rating agencies. The credit ratings are set approximately in a similar way by all rating agencies. The grade is set on the person who has borrowed the ability, in this case Swedbanks, to pay interest during its term and finally repay the loan. Therefore, the ratings and prospects can distinguish between loans that are taken in longer and shorter time. The difference against an auditor as auditors do is take a grip on the company’s survival at an “eternal” time while the credit rating thus applies over the duration of different loans.
The bank must act
In order for Swedbank to maintain its credit rating, S&P requires that, in summary, this should happen:
• Management must regain trust through concrete measures.
• The authorities must not detect serious control and management deficiencies
• The risks of large fines and penalties that can damage the bank’s finances must not be made concrete.
So there is much that must be in place and that must not happen because S&P should not lower Swedbank’s rating in three months. It’s the time the bank is going to get everything in place to save the grade. In addition, the other rating agencies also wake up to life when one of the others acts.
Customers risk paying
Thus, a poorer rating risks making it more expensive to borrow for Swedbank. The risk that they will pass on the “bill” to their customers is of course. The protection the bank’s customers have is that competition with other banks works. Swedbank cannot deviate too much from other banks in order to attract new customers and retain old ones.
But this is of course something to keep in mind not only for the rating agencies but also for Swedbank’s customers.