29 Feb 2012 11:53

Why did SEB not take ECB´s loan offer?

ECB already in December made available three year loans to European banks with an interest rate of 1 per cent. The move was intended to facilitate banks continuing to extend loans and avert at credit crunch as well as encourage banks to invest in bonds issued by highly indebted euro zone countries.

About one hundred European banks used the opportunity and the intended results appear to have come through. ECB plans another offer with the same conditions on Wednesday 29 February.

No Swedish bank took the offer neither in December nor this time.

Why did SEB say no?

“We have a different situation in Sweden and the loans are not needed in the Swedish banking system. SEB has very good access to cost efficient short and long term funding on several markets without having to post collateral, which is a pre-requisite for banks taking up ECB’s offer,” Anders Kvist says.

“It’s good for building trust in funding markets if banks act predictably and take a long term view. When a bank decides not to use funding like this, it’s a clear sign of strength.”

Couldn’t SEB offer cheaper mortgages if the bank took the offer?

“It’s not possible to make that connection. We don’t finance mortgages with money from the central bank. Mortgages are long term loans and we should fund them with significantly longer term borrowing than ECB offers. We and the Swedish authorities have a common view in this area.”