The banking system

Traditional banking involves three main tasks:

• issuing loans (credits)
• accepting deposits from the public
• mediating payments through a general payment system.

The major banks

The major banks, Handelsbanken, SEB, Swedbank, Nordea and Danske Bank, or the universal banks as they are also known, are represented in all areas of the Swedish financial market and have extensive international operations. They offer a wide range of products, including various types of loans to individuals and companies, different payment solutions, advisory and risk management services of various kinds. They offer products or services that cover all three main tasks. 

The major banks often also have their own insurance companies and fund management companies, as they want to offer a complete range of financial services. By doing so, they facilitate trading for agents who need to be able to buy and sell different assets frequently, such as hedge funds or traditional funds.

Niche banks

In addition to the major banks, there are a number of niche banks that specialise in one or more market segments. There are so-called mortgage banks whose core business is to provide households with mortgages against collateral. There are also banks that mainly offer unsecured consumer loans to households. These banks are commonly referred to as consumer credit banks and often also offer payment services of various kinds. Another category of banks are security-trading banks, which mainly specialise in securities trading and fund and asset management. There are also banks with core activities focusing on product and sales financing.

The banks’ role in society

Banks provide essential services to society, both to households and to commercial interests. They accept deposits from the public and provide various types of credit. This also means that savings can be converted into investments. Sweden’s banking system is concentrated around a few tightly interwoven major banks. Consequently, in the event of a financial crisis, problems in one of these banks risk rapidly spreading to the entire banking system, which could involve a threat to the stability of the Swedish financial system.

The Riksbank oversees the banking system

The Riksbank oversees and analyses the Swedish financial system from the perspective of risk and vulnerability, with a focus on the systemically-important major banks operating in Sweden. The Riksbank makes assessments of the banks’ resilience to financial stress and other unexpected negative events, primarily from the perspective of liquidity risk and credit risk.

One of the Riksbank’s most important tasks is to supply liquidity to the banking system when necessary. This can happen either under normal economic circumstances, or in a potential crisis situation. In a stress situation, the Riksbank can provide liquidity to the economy as a whole, but it can also issue emergency liquidity assistance to individual participants.

The Riksbank also takes part in the design of international banking regulations and in other banking-related forums on both the national and international levels.