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Handelsbanken: Comment on EU's plan to strengthen capitalisation of European banks

October 27, 2011 - London

The European Union, EU, has agreed that banks which have lent money to the State of Greece will write off one-half of these debts.

The EU is also now requiring the banks to build up a temporary buffer to cope with these write-offs.The requirement could include Handelsbanken, even though Handelsbanken does not have any exposure to the Greek state.

Handelsbanken does not have any exposure to Portugal, Spain, Italy, Ireland - nor to Greece - which are sometimes called the "PIIGS" countries.

Handelsbanken has a very restrictive view of credit risk and has therefore built up large reserves and buffers over a long period of time. The Bank has pre-funded all bonds maturing within the next 12 months. In addition, Handelsbanken has a liquidity reserve well in excess of SEK 700 billion - which corresponds to more than 25 per cent of the Bank's total assets.

Nonetheless, the rules that are being introduced now - and which are detrimental to banks with a large share of mortgage in their lending - require Handelsbanken to build up an extra buffer of nearly SEK 10 billion.This requirement will disappear with the introduction of the new, more restrictive rules of Basel III.

"This requirement will not be a problem for Handelsbanken. If it is introduced, the buffer will be in place within the specified time frame," says Ulf Riese, CFO at Handelsbanken.

As soon as the new buffer is no longer required, it will be dissolved.

"We are an extremely cautious bank - but we do not create buffers for exposures that we do not have," notes Ulf Riese.

For further information, please contact:

Mikael Hallåker, Head of Investor Relations, +46 8 701 2995
Lars Höglund, Investor Relations, +46 8 701 5170

For more information about Handelsbanken, see

Press Release PDF

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Source: Handelsbanken via Thomson Reuters ONE



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