Sweden’s government said it won’t criticize banks for ladling out bigger cash rewards to shareholders while warning the industry to gird for tighter rules that will limit the scope for future dividends.
The European Union’s bid to set out structure rules for about 30 of the bloc’s largest banks hit an early stumbling block as finance ministers challenged aspects of the plans that they said could harm lending to businesses.
Finance Minister Anders Borg said the government will next take steps to force Swedish lenders to cut their reliance on foreign currency funding after it presents its plans for higher capital requirements.
Sampo Oyj, the biggest investor in Nordea Bank AB, said a rush by firms to sell bonds will help the bank generate capital and raise its dividend ratio even as Sweden warns lenders to think twice before doing so.
Sweden’s main bank association recommended lenders force more borrowers to pay down their home loans as regulators and the government are working on a “road map” for stricter rules to halt a buildup in consumer debt.
Investor AB, SEB AB’s biggest shareholder, said Finance Minister Anders Borg is wrong to criticize mounting dividends at Sweden’s banks because the capital distributed is a boon to the economy, not a threat.