DBRS Designates SEB as a Critically Important Bank in Sweden – Short-Term Ratings Trend Now Stable

DBRS has today designated Skandinaviska Enskilda Banken AB (SEB or the Bank) as a Critically Important Banking organisation (CIB) in Sweden. As a result of this designation, DBRS has confirmed SEB’s Short-Term Debt and Deposits ratings at R-1 (middle). The trend is Stable. Concurrently, DBRS has removed SEB’s short-term ratings from Under Review with Negative Implications. The Bank’s Senior Unsecured Debt & Deposits ratings of AA (low) remain Under Review with Negative Implications where they were placed on 29 April 2009.

This rating action follows DBRS’s introduction of its floor rating concept in Sweden. For CIBs in Sweden, DBRS has assigned a floor rating of A (high) and R-1 (middle) at the bank level. In the cases where there is a holding company, the floor has been set at “A” and R-1 (middle). The trend on the aforementioned floor ratings is Stable. As a CIB, SEB’s ratings are now subject to the floor rating. Accordingly, the trend on SEB’s short-term ratings is now Stable. SEB’s long-term ratings are unaffected, as they are currently above the floor.

The level of the rating floor reflects DBRS’s expectation that the Swedish government will provide support, if necessary, to prevent any CIB from weakening below this rating level. DBRS views A (high)/R-1 (middle) as the level of creditworthiness that market participants demand for CIBs to be viewed as essential counterparties, as CIBs need to be perceived as reliable partners in undertaking a wide range of financial transactions. DBRS views the floor as the level of support at which the Swedish government will sustain their CIBs, if necessary, to ensure that the financial system is fully functioning.

CIBs will usually be banking organisations that have extensive involvement in a country’s financial markets and perform critical roles in the flow of financial transactions. As such, the loss of the market’s confidence in a CIB’s ability to perform as a counterparty could impact the market’s perception of other participants and lead to a degradation of the functioning of the financial markets. In the view of DBRS, the actions taken to date by the Swedish government clearly demonstrate its commitment to support its CIBs at this level.

DBRS continues to ascribe implicit systemic support for certain banks in Sweden, as reflected in the SA-2 support assessment for SEB. For institutions with a designated SA-2 support assessment, DBRS expects some form of external support, if needed, ideally with a timeliness element in it.

For more information on the floor ratings concept, please see the press release published earlier today entitled “DBRS Expands Its Floor Rating Concept to Sweden”, which is available at www.dbrs.com.

The applicable methodologies are Analytical Background and Methodology for European Bank Ratings, Second Edition and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments, which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.