Purchasing and owning banking institutions in Sweden

Every successful economy is built on reliable and efficient financial systems. Accordingly, extremely effective banking and other credit institutions manage competently the financial system of Sweden and make the state truly prosperous. The article would be useful for the ones planning to obtain a banking institution license in Sweden.

How to obtain the license

It is necessary to get an SFSA license for all physical and legal entities who hold a majority stake in a bank. By holding a majority stake entities receive an opportunity to have a decisive vote in a banking institution in the state of Sweden or provides them with a right to buy stakes from 10% and more unlimitedly.

It is required in Sweden to pass an SFSA compliance check prior to getting a banking service provider license. The candidate’s track record and financial status will be inspected by the regulator as well as their obedience to the legal requirements necessary for achieving a license.

Responsibilities coming with ownership of a banking institution

Generally, Sweden does not pose any limitations for business operations of the banking institution’s owner. Therefore, a non-Swedish banking institution participating in receiving provision of non-financial services can acquire a bank in Sweden. Nevertheless, non-domestic owners of a banking institution are obliged to present the status of their senior management to SFSA.

A holding entity, viewed as an FHC or MFHC, is required to conform to SFSA conditions for it to be registered. That is why if the entity is seeking to be considered an FHC or MFHC, it is necessary to confirm that entity’s daughter companies are investment-orientated entities or banking institutions.

Consequences of bankruptcy

After the purchase of a banking institution or acquisition of a controlling stake in Sweden, the new stakeholder becomes responsible for repaying all liabilities gained by the institution. In the case when the general financial situation of a company worsens, SFSA has a right to decrease the banking institution’s share. It should also be considered that SFSA has a possibility of arranging the debts of a banking institution to be written off or transformed into equity (mostly relatable for the subordinated ones).

Having trouble understanding international banking law? Contact COREDO to receive answers to all your questions about banking legislation in Sweden.

Owning a banking institution

SFSA’s approval is strictly required for all purchases and transfers of stakes in a banking institution in Sweden. This rule especially applies to the operations with twenty, thirty or fifty percent stake in banking institutions.

If senior management of a banking institution was changed, the owners are supposed to inform antitrust regulators about it. This requirement is identical for the cases when stakes of a banking institution are traded on Swedish stock exchanges.

Purchasers not from Sweden

By setting up subsidiaries, non-domestic banking institutions can offer their services in Sweden. Prior to taking this step, it is necessary to receive SFSA’s approval as well, which can be granted within two months. It is also needed to submit:

  • Amount of capital and ability to meet debts and other commitments
  • Address of the institution and addresses of senior management
  • A business plan describing how the subsidiary will operate.

In the state of Sweden EEA-based institutions can provide their services without establishing subsidiaries. The condition is to inform SFSA about the planned activities that will be operated on Sweden’s territory.

For non-EEA banking institutions, it is necessary to file an application for an SFSA license in order to start a subsidiary in the state of Sweden.

Deadlines for the acquisition

After the application is filed, it takes about sixty days for SFSA to make a decision. SFSA has to appoint its representative to B of D of the expected buyer. The decision making time of SFSA varied depending on the business of the regulator with other applications or structure of the purchasing institution.

If you are thinking about purchasing a banking institution in the state of Sweden, or planning on registering a foreign banking institution in Sweden, the specialists in COREDO are prepared to assist you. Our knowledge of Swedish banking institutions is profound and we look forward to your requests.