Transcript Sweden

Swedish Perspective on Financing
Growth and the Capital Markets Union
ICSA Annual Meeting, 23 May 2016
Karolina Ekholm
State Secretary to the Minister of Finance
Ministry of Finance Sweden
Government Offices of Sweden
2
Relatively good performance of
Swedish growth
GDP growth, annual percentage change, 2016 forecast
8.00
6.00
4.00
Sweden
Euro area
2.00
USA
UK
0.00
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Denmark
Norway
-2.00
-4.00
-6.00
Source: Macrobond, own calculations
Ministry of Finance Sweden
Government Offices of Sweden
Supported by increasing investment
Total investment as a share of GDP,
percent
Total investment, index 2008=100, fixed
prices
120
29
110
27
Sweden
100
25
Euro area
90
Denmark
23
Norway
80
UK
21
70
USA
19
50
17
40
15
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
60
Source: Eurostat, OECD
Ministry of Finance Sweden
Government Offices of Sweden
Sweden, like other European
countries, is bank dependent
Sources of financing for non-financial corporations
Sweden
Euro area
USA
Bonds
Short-term loans
Long-term loans
Listed equity
Unlisted/other equity
Other
2014
Source: Eurostat, OECD
Ministry of Finance Sweden
Government Offices of Sweden
2014
2013
Increased bank lending despite high
prudential requirements
Swedish bank lending to non-financial
corporations, bn SEK
Outstanding corporate bonds,
Swedish non-financial corporations,
bn SEK
1200
1100
1000
900
800
700
600
500
400
Source: Finansinspektionen
Ministry of Finance Sweden
Government Offices of Sweden
Source: SCB
Banks optimistic about future lending
to corporate sector
2016
2015
2014
How do you think your bank’s
lending to the corporate sector will
evolve over the coming year?
2013
2012
2011
2010
2009
2009
Increase significantly
Increase somewhat
Remain unchanged
Decrease somewhat
Decrease significantly
2007
2006
2005
2004
Source: CMA Research/Almi Företagspartner AB (2016)
Ministry of Finance Sweden
Government Offices of Sweden
High profitability of large Swedish
banks
Estimates of P-TBV and RoTBV for a sample of European banks, 2016
1.8
P/TBV 2016
R² = 0,8415
1.6
Swedbank
SHB
Bankinter
1.4
SEB Banken
KBC
1.2
UBS
1
Intesa
BBVA
ING
0.8
CaixaBank
BP Milano
0.6
B. Popular
0.4
BP Emilia
Unicredit
Banco Popolare
B. Sabadell
Mediobanca
SG
Danske Bank
Nordea Bank
Erste Group
Natixis
ABN AMRO
DnB
Santander
Bankia
BNPP
Crédit Agricole
Raiffeisen
UBI Banca
0.2
RoTBV 2016 %
M. Siena
0
1%
3%
Ministry of Finance Sweden
Government Offices of Sweden
5%
7%
9%
11%
13%
15%
17%
Initiatives in Sweden related to
corporate financing
• Ongoing work on reshaping the system for
corporate taxation to reduce the debt-bias
• Public guarantee/loan funds, equity and
venture capital funds
• Creation of a public fund-of-funds to
revitalise the private venture capital market
Ministry of Finance Sweden
Government Offices of Sweden
Swedish perspectives on the CMU
objectives
• Sweden supports the overall goals of the
Capital Markets Union
– together with the Investment Plan and Call for Evidence on
the cumulative impact of EU regulatory frameworks for
financial services
• Diversification of funding sources is welcome
– Helps intermediation and improves resilience
• Does not solve the nexus of underlying
problems in the Euro area
– Weak banking sector, debt overhang, low expectations
regarding future growth
Ministry of Finance Sweden
Government Offices of Sweden
Swedish priorities for the CMU
milestones
• Remove barriers to the free movement of
capital.
• Support financial market developments that
contribute to sustainability.
• Review key legislation from a
proportionality perspective…
– …but important to not lower prudential standards.
• Facilitate more funding choices for
businesses, especially SMEs.
Ministry of Finance Sweden
Government Offices of Sweden
Thank you!
Ministry of Finance Sweden
Government Offices of Sweden
Extra
Ministry of Finance Sweden
Government Offices of Sweden
Financing growth in Sweden
• According to surveys, raising capital is not
an obstacle in Sweden.
– Tax bias may incentivise debt instead of equity
financing.
• Sweden, like the rest of the EU, is bank
dependent.
– 75% of external funding of SMEs through bank loans
– Strong bank lending to the corporate sector
• 2015 all-time high for IPOs on regulated
markets and MTFs in the Nordics
Ministry of Finance Sweden
Government Offices of Sweden
Nexus of underlying problems in
large parts of the EU
• Weak banking sector
– Low profitability with high NPLs
• Weak economic development
– Debt overhang hampers growth at the same time as growth is
needed to reduce debt ratios.
• Weak future outlook
– Low expectations a break on demand and investments,
further impacting the vicious circle of low growth and debt
overhang
Ministry of Finance Sweden
Government Offices of Sweden