1. Swedish Perspective on Financing Growth and the Capital Markets Union
ICSA Annual Meeting, 23 May 2016
Karolina Ekholm
State Secretary to the Minister of Finance

2. Relatively good performance of Swedish growth GDP growth, annual percentage change, 2016 forecast
Source: Macrobond, own calculations

3. Supported by increasing investment
Source: Eurostat, OECD

4. Sweden, like other European countries, is bank dependent Sources of financing for non-financial corporations
2014
2014
2013
Source: Eurostat, OECD

5. Increased bank lending despite high prudential requirements
Swedish bank lending to non-financial corporations, bn SEK
Outstanding corporate bonds,
Swedish non-financial corporations, bn SEK
Source: Finansinspektionen Source: SCB

6. Banks optimistic about future lending to corporate sector
2016
2015
2014
2013
2012
2011
2010
2009
2007
2006
2005
2004
How do you think your bank’s lending to the corporate sector will evolve over the coming year?
Increase significantly
Increase somewhat
Remain unchanged
Decrease somewhat
Decrease significantly
Source: CMA Research/Almi Företagspartner AB (2016)

7. High profitability of large Swedish banks
Estimates of P-TBV and RoTBV for a sample of European banks, 2016

8. Initiatives in Sweden related to corporate financing
Ongoing work on reshaping the system for corporate taxation to reduce the debt-bias
Public guarantee/loan funds, equity and venture capital funds
Creation of a public fund-of-funds to revitalise the private venture capital market

9. Swedish perspectives on the CMU objectives
Sweden supports the overall goals of the Capital Markets Union
together with the Investment Plan and Call for Evidence on the cumulative impact of EU regulatory frameworks for financial services
Diversification of funding sources is welcome
Helps intermediation and improves resilience
Does not solve the nexus of underlying problems in the Euro area
Weak banking sector, debt overhang, low expectations regarding future growth

10. Swedish priorities for the CMU milestones
Remove barriers to the free movement of capital.
Support financial market developments that contribute to sustainability.
Review key legislation from a proportionality perspective…
…but important to not lower prudential standards.
Facilitate more funding choices for businesses, especially SMEs.

11. Thank you!

12. Extra

13. Financing growth in Sweden
According to surveys, raising capital is not an obstacle in Sweden.
Tax bias may incentivise debt instead of equity financing.
Sweden, like the rest of the EU, is bank dependent.
75% of external funding of SMEs through bank loans
Strong bank lending to the corporate sector
2015 all-time high for IPOs on regulated markets and MTFs in the Nordics

14. Nexus of underlying problems in large parts of the EU
Weak banking sector
Low profitability with high NPLs
Weak economic development
Debt overhang hampers growth at the same time as growth is needed to reduce debt ratios.
Weak future outlook
Low expectations a break on demand and investments, further impacting the vicious circle of low growth and debt overhang