OREANDA-NEWS. August 07, 2012. Ratings agency Fitch has raised Swedbank’s rating from A to A+ Stable Outlook, recognising that the bank has reduced its share of bad loans and strengthened its capital buffers, reported the press-centre of Swedbank.

“A stable outlook means that according to Fitch’s expectations, Swedbank will keep its focus on the strength and liquidity of its capital without increasing its business risks at the same time,” Fitch announced in its statement.

Any further increase in the rating is curbed by the fact that it is already at a high level and that in covering its capital needs the bank depends on loans taken from capital markets, wrote Bloomberg. “If the bank became unable to obtain competitively priced loans from the capital market for a long period or if insecurity in the bank’s Baltic portfolio deteriorated due to the European debt crisis, there would be pressure to lower the rating,” noted Fitch.

The government of Sweden, where the size of the banking sector exceeds the country’s GDP four times, is trying to establish stricter rules than other countries by demanding that banks maintain the share of Tier 1 capital at 10% of risk-weighted assets from January and at 12% from 2015. The Regulations of the Basel Committee require Tier 1 capital to be at the level of 7%, while the level established by the European Banking Authority (EBA) for some European banks is 9%.

Swedbank announced on 18 July that the bank’s Tier 1 capital according to Basel II at the end of the second quarter was 16.6% of risk-weighted assets.