Moody's Investors Service said on Wednesday it would keep Sweden's Swedbank on review for a possible downgrade following the bank's recent share issue. Moody's said in a statement the Swedish bank's A1 senior debt and deposit ratings and C- financial strength rating remained under review.
Swedbank surprised markets on Monday with a 15 billion Swedish crown ($2.06 billion) rights issue to bolster a balance sheet hit by bad debts in the Baltic region. The move came just a month after the bank told investors it had a resilient capital base. The bank's cash call will give Swedbank a capital buffer to cope with losses in a deteriorating operating environment, it said.
Swedbank is the biggest bank in the Baltic region following aggressive expansion in Latvia, Lithuania and Estonia, and is seen facing continued losses there as those economies shrink by about a fifth. Moody's said it would take into account the bank's higher expected losses due to worsening conditions in the Baltics, Ukraine and Sweden. It expects to conclude its review on Swedbank in the next couple of weeks.