Published 10 November 2022 at 17.23
Economics. Sweden is facing a financial and real estate crisis when the largest Swedish real estate companies cannot pay back 500 billion in loans that are due soon. The Financial Supervisory Authority warns of that scenario in a report.
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The industry is now in a very vulnerable position and in October one of the biggest real estate moguls, former politician Ilija Batljan (S), took the unusual step of taking to Twitter to comment on rumors that he was insolvent.
According to the Financial Supervisory Authority, the highly leveraged propertysector probably does not have the opportunity to get bank loans that cover the need, reports SVT.
– In principle, the banks have the capacity to cover the entire this need. But I don't think they will want to do that, says Henrik Braconier, chief economist of the Swedish Financial Supervisory Authority to SVT.
During the crisis in the 1990s, the banks had entered the real estate industry with large loans, which therefore dragged the banks along in the case when the rental market for commercial real estate was knocked out at the beginning of the crisis. This time the companies have instead borrowed on the bond market – at an interest rate of around one percent – but now the interest rate is instead 7 percent. Something they cannot handle.
FI now assesses that the situation threatens financial stability in Sweden.