No reprieve for embattled Swedbank
Calls by Swedbank for Swedish financial authorities to implement a ban on the short selling of stock have fallen on deaf ears.
In an interview with the Dagens Industri newspaper, Swedbank’s board chair Carl Eric Stålberg suggests that short selling of stock in financial companies be banned for the rest of the year.
The bank’s stock has been hit by speculation about the soundness of the bank’s finances following the news that the bank had large positions with the bankrupt US investment bank Lehman Brothers.
Since the start of the year, Swedbank stock has dropped by nearly 50 percent, and has been particularly volatile in recent days amid rumours of a possible takeover and reports that customers have been closing their accounts in droves.
By mid-afternoon on Thursday, shares were down around 5 percent to 95.50 kronor ($14.45) per share.
According to analysts who spoke with Dagens Industri, much of Swedbank’s volatility is attributable to short sales, a practice by which investors borrow shares in a company with the intent of purchasing them outright at a lower price.
Several of the world’s major markets, including the United States, Britain, Italy, and Australia, have implemented temporary bans on the practice to help protect financial firms from downward spiraling stock speculation.
“My appraisal is that in these times, with financial uncertainty and high volatility and with short sales having been banned in many other markets, it would be appropriate for Sweden to also ban short sales in financial companies for the rest of the year,” Stålberg told Dagens Industri.
But other Swedish banks don’t see a need for the action.
SEB believes there hasn’t so far been the kind of extraordinary circumstances which would justify a ban.
“We also have full confidence that the Financial Supervisory Authority (Finansinspektionen) is following this closely, which they have said, and will raise their voice if necessary,” said SEB spokesperson Odd Eiken to the TT news agency.
While Handelsbanken declined to comment on the situation, Nordea spokesperson Helena Östman also noted that her organization doesn’t see a need to go so far as to prohibit short selling.
“So far we don’t see any need to limit short selling here,” she told TT.
On Wednesday, the Financial Supervisory Authority issued a call to banks to continue to submit data on borrowed shares to help the agency better monitor the situation.
However, the agency emphasized that it sees no need to request a ban and that doing so would like likely require new legislation.
“We don’t have much of an ability to do it according to the laws we have,” said Financial Supervisory Authority spokesperson Mattias Olander to TT.
How is the credit crunch affecting you? Have you found it hard to get a mortgage in Sweden, despite a decent income? We want to hear your story. Email us at [email protected].
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In an interview with the Dagens Industri newspaper, Swedbank’s board chair Carl Eric Stålberg suggests that short selling of stock in financial companies be banned for the rest of the year.
The bank’s stock has been hit by speculation about the soundness of the bank’s finances following the news that the bank had large positions with the bankrupt US investment bank Lehman Brothers.
Since the start of the year, Swedbank stock has dropped by nearly 50 percent, and has been particularly volatile in recent days amid rumours of a possible takeover and reports that customers have been closing their accounts in droves.
By mid-afternoon on Thursday, shares were down around 5 percent to 95.50 kronor ($14.45) per share.
According to analysts who spoke with Dagens Industri, much of Swedbank’s volatility is attributable to short sales, a practice by which investors borrow shares in a company with the intent of purchasing them outright at a lower price.
Several of the world’s major markets, including the United States, Britain, Italy, and Australia, have implemented temporary bans on the practice to help protect financial firms from downward spiraling stock speculation.
“My appraisal is that in these times, with financial uncertainty and high volatility and with short sales having been banned in many other markets, it would be appropriate for Sweden to also ban short sales in financial companies for the rest of the year,” Stålberg told Dagens Industri.
But other Swedish banks don’t see a need for the action.
SEB believes there hasn’t so far been the kind of extraordinary circumstances which would justify a ban.
“We also have full confidence that the Financial Supervisory Authority (Finansinspektionen) is following this closely, which they have said, and will raise their voice if necessary,” said SEB spokesperson Odd Eiken to the TT news agency.
While Handelsbanken declined to comment on the situation, Nordea spokesperson Helena Östman also noted that her organization doesn’t see a need to go so far as to prohibit short selling.
“So far we don’t see any need to limit short selling here,” she told TT.
On Wednesday, the Financial Supervisory Authority issued a call to banks to continue to submit data on borrowed shares to help the agency better monitor the situation.
However, the agency emphasized that it sees no need to request a ban and that doing so would like likely require new legislation.
“We don’t have much of an ability to do it according to the laws we have,” said Financial Supervisory Authority spokesperson Mattias Olander to TT.
How is the credit crunch affecting you? Have you found it hard to get a mortgage in Sweden, despite a decent income? We want to hear your story. Email us at [email protected].
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