Nordic Banks Thrive Despite Negative Outlook

Banks in Scandinavia, in the wake of the 1990s financial crisis that led to substantial changes, are now among the healthiest in Europe, with access to capital markets that are shut to many other institutions. The reason? The majority of their business is local, accompanied by large capital reserves and the lowest default risks in Europe.

A Bloomberg report Tuesday said that such banks are not only doing considerably more corporate lending than other banks, they are outperforming bigger competitors. As a result, investors are flocking to them as well—all this despite the fact that Moody’s has rated the outlook negative for the banks of Norway and Sweden, because of a “challenging operating environment.”

But with so many favorable factors, most of the individual banks are rated stable. In a Monday report, Moody’s Senior Vice President Janne Thomsen said of the ranking, “These stable outlooks reflect most banks’ solid fundamentals throughout the relatively mild 2009 recession and subsequent recovery. The negative system outlook captures the worsening global economic conditions.”