Foreign banking in Sweden

24.08.2020

This time we will talk about how the banking sector is regulated in Sweden especially from the point of view of foreign shareholders.

Sweden and especially Stockholm hosts many large banking groups and banking titans like SEB, Swedbank, Nordea, and Handelsbanken. These are the “big four” of international banks and have control over the majority of the country’s financial activity. Moreover, there are around thirty foreign banks in Sweden that are able to operate within the region as well as throughout the country.

According to the Swedish constitution, the Riksank, the Central Bank of Sweden, is obliged to report directly to the Swedish Parliament. The Central Bank is also responsible for the country’s monetary policy.

Financial activity in Sweden

There are various financial institutions in Sweden. Savings banks offer many types of savings accounts and are fairly popular among clients. Also, international banks have their subsidiaries in Sweden, too, and present themselves a full variety of services. When it comes to bank ownership, it can belong to someone nonrelated to the financial sector.

Permission from the authorities

In Sweden, it is not possible to have a controlling stake (10% or more) of the bank’s shares without owning specific permission. The Swedish Financial Supervisory Authority requires this authorization. The authorities may also be interested in examining individuals who have a substantial influence on the company’s management decisions. The regulator also obliges all banking institutions to inform it in case of any changes in a bank’s management.

Liability of shareholders

If the shareholder is responsible whether intentionally or not for the bank’s losses, they are liable to the company. If the financial situation is becoming worse, the regulator can reduce the bank’s authorized capital. Therefore, it will have a negative influence on the shareholders.

Additionally, the regulator has the right to write off or convert the shareholder’s debt given into equity.

Bank share transfers

The financial authorities are supposed to be informed if a shareholder reaches the thresholds between 20% and 50% of shares or voting rights. Not only the financial authorities but also the antitrust authorities from Sweden and Europe and the securities regulators can become interested in these changes.

A representative office in Sweden

To become involved in banking in Sweden a foreign bank can start a branch in Sweden if the bank belongs to the European Economic Area. For banks that do not come from the European Economic Area, it is not possible to open a branch without authorization.

After obtaining a banking license of Sweden, the foreign bank from the EEA can provide financial services only if it has the permission form a parent bank in its country of origin.

Conclusion

As we have discussed, foreign banks can engage in banking in Sweden. Foreign owners can buy shares there and foreign banks can open branches. For more details and specific questions, contact our specialists in COREDO who will find the answers and help you establish a business in Sweden.

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