More On Swedbank

Swedbank continues to be the center of negative news in Swedish media (see for example here, here, here, here and here). Rumors circulate about how much money Swedbank can lose in its baltic division and its stake in Lehman brothers. Swedbank chairman Carl Eric Stålberg angrily denies the rumors and says that they are confident to get back the money Lehman owes them and says that their credit losses in the Baltic countries will be limited. However, many depositors and speculators don't believe him and which is why some are now withdrawing money from Swedbank accounts (Stålberg however claims that there are very few withdrawals and that more people are depositing new money).

Stålberg characterize these rumors as something made up by vile speculators, and has come out advocating a temporary ban on short selling, to prevent short sellers from pushing down Swedbank stocks.

At the same time however, media reports that Swedbank and other Swedish banks are increasingly starting to require some of their borrowers to repay the loans in advance. That presumably reflect a fear that they won't be able to pay back later, and likely also reflect a generally more restrictive lending standard. That implies that monetary conditions are rapidly becoming much tighter. This should finally solve the problem of too high inflation and current account deficits, but also deepen the short term downturn. I'll return later in the day with a separate post on the baltic economies.