If a week, as a British prime minister, Harold Wilson once said, is a long time in politics, two months is an eternity in banking.
On June 30, Michael Wolf, chief executive of Swedbank, said that he did not think the bank would need fresh capital following a $1.5 billion issue at the end of last year. On Monday, he tapped shareholders for a further $2.1 billion.
While Swedbank won't win the Investor Relations award for shareholder management, there is method in this U-turn. If things turn out to be even worse than the most pessimistic of the scenarios envisaged by Swedbank, and Sweden's central bank in its public stress tests, the extra ballast will be needed to navigate the choppy Baltic waters , Reuters reports.
“The aim is to strengthen our competitive position in our four home markets; that is, Sweden, Estonia, Latvia and Lithuania,” Michael Wolf, chief executive of the bank, said in a conference call Monday.
Mr. Wolf said that the bank would be better able to support its key clients with the extra 15 billion kronor, and that the funds would help Swedbank return to independence. To borrow from other banks, it presently depends upon a guarantee from the Swedish government.
Almost half of the offering was taken up by existing shareholders, with the rest guaranteed by its underwriters, Bank of America-Merrill Lynch and Credit Suisse Group , New York Times reports.
Meanwhile, earlier Monday, Swedbank launched its second rights issue in less than a year to enable better access to wholesale funding markets and to help battle soaring bad loans in the Baltic region , Wall Street Journal reports.
Russian officials have repeatedly declared that Israeli aviation poses a threat to the Russian military in Syria.