STOCKHOLM, Nov 26 (Reuters) - Swedish banks are financially strong, the central bank said on Wednesday, but it noted that funding measures taken by authorities were still necessary to safeguard the financial system.
The Riksbank made the comments in its twice-yearly stability report, published as Sweden faces its sternest financial test since a banking crisis in the early 1990s.
"Swedish banks remain financially strong and have a good resilience to shocks," the Riksbank said. "Swedish authorities have taken extensive measures to facilitate the banks' funding. These measures are now a necessary condition for maintaining satisfactory stability in the Swedish financial system."
Analysts said the comments came as little surprise.
"All in all, this shows the risks have increased somewhat but are not a huge problem, as the Riksbank sees it," said Torbjorn Isaksson, economist at Nordea. "The Swedish market remains resilient, and that was pretty much what we had expected to hear."
Further evidence of the economic pain Sweden is experiencing came on Wednesday with data showing confidence among consumers and businesses was extremely fragile. The National Institute of Economic Research, a think tank, said its consumer confidence index was minus 24.5 in November versus minus 24.7 in October.
SERIES OF MEASURES
Swedish authorities have pumped in tens of billions of dollars' worth of liquidity to reduce strains in the banking system and introduced a series of measures, including special credit facilities and new types of loans.
The state also launched a voluntary scheme to guarantee new debts by Swedish banks. Swedbank, the only Swedish bank to join the scheme so far, sold a 2 billion euro ($2.6 billion) bond under the programme this week.
Swedbank is exposed to the Baltic States after it expanded rapidly there in recent years. Economies in the Baltics, prior to the global financial crisis, had boomed but now were suffering a sharp downturn.
The Riksbank said there was a "considerable risk" that economic troubles in the Baltic countries will be prolonged and that Swedish banks' loan losses there may be more than expected.
"However, the stress tests carried out by the Riksbank indicate that the Swedish banks can manage substantially lower credit ratings among both their Swedish and Baltic borrowers, even if this were to occur at the same time," it said.