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Sweden’s banking sector: Facts & Figures

Updated September 2018 – For earlier editions of Facts & Figures click here

The Swedish economy continued to strengthen in the fourth quarter of 2017, writes the National Institute of Economic Research (NIER). The NIER’s Economic Tendency Survey shows strong optimism in the business sector. Consumer confidence, on the other hand, has fallen considerably in recent months to more historically normal levels. This is probably a result of the recent downturn in the housing market with falling property prices. After a strong surge in the first quarter this year, employment growth will be more subdued for the remainder of 2018 and in 2019. The NIER writes that there are bigger labour shortages in both the business sector and the public sector. One reason for this is that the share of people with a weak attachment to the labour market has risen markedly over the past decade.

There are four main categories of banks on the Swedish market: Swedish commercial banks; foreign banks; savings banks and co-operative banks. In December 2017, Sweden had a total of 119 banks, of which 40 commercial banks, 30 foreign banks, 47 savings banks and two co-operative banks.

The number of commercial banks and foreign bank branches in Sweden has increased from 59 in 2007 to 70 in 2017, due to the rise in the number of Swedish commercial banks, including credit market companies that have become banks. The number of foreign banks and bank branches has been stable around 30 banks for the last ten years. The fifth largest bank in Sweden, in relation to the total balance sheet, is a foreign bank branch.

Cross-border activities have increased over the last several years and the major Swedish banks all have a large share of their business abroad. The banking market in the other Nordic countries is important for the major Swedish banks as well as the Baltic States and other countries in northern Europe.

The Swedish state owns one bank, which mainly offers mortgage loans. Since the State sold its share in another bank in 2013 the state has no other ownership in the banking sector.

The Swedish banks have 1,409 branch offices compared to 1,950 branch offices in 2007. Branch offices are still an important way to meet the customer for several banks, even though the number of branch offices has diminished slowly in the last ten years. The Swedish banks have around 40,000 employees compared to 90,000 in the whole financial sector.

The most common means of payment in Sweden are the various charge cards and electronic giro systems. Most payments are linked to bank transaction accounts, which register salary deposits, ATM withdrawals, credit and charge card purchases and automatic transfers. In Sweden there are 2,850 ATMs and 258,000 card payment terminals.

Paper-based payments such as giro forms, cheques and cash payments have been replaced by electronic payments of various types. As an example, the use of different kinds of cards has increased from 1,200 million transactions in 2006 to around 3,200 million transactions in 2016.

According to a survey by the Riksbank, the Swedish central bank, 93% of the Swedish citizens have used a debit card in the past month and 62% have used the Swish mobile payment service. Swish, which was introduced five years ago and offers real-time account-to-account transfers, has 6.3 million users, over 60% of the Swedish population.

The strong activity in the Swedish economy is mirrored in the growth of loans and deposits. In particular, the high demand in housing has increased house lending. Lending to the Swedish public increased by 7.4% in 2017 and deposits from the public increased by 6.6% in 2017.

In a survey among managers of local bank branch offices, business volumes indicate that lending to SMEs has increased since 2013. In the same survey the managers believe that lending will continue increasing in 2018. According to an OECD report, 37% of outstanding business loans in Sweden are loans to SMEs. In a survey by an organisation for SMEs it shows that bank loans are the most common form of financing by SMEs: 20% of the Swedish SMEs in the survey used bank loans to finance investments.

Sustainable finance has high priority in Sweden. Initiatives in the area have started or are planned by both banks and government.

Normal bank services are to a large extent performed through mobile phones, tablets and computers. Moreover, new ways to perform bank services are increasing rapidly, e.g. mobile payment services, Bank e-ID and e-invoices. According to the ECB, Swedes use non-cash payments, to a larger extent, than any other Europeans. For that reason, cash in circulation is declining rapidly.

Finansinspektionen (the Swedish Financial Supervisory Authority) and the Riksbank have the main responsibility of monitoring compliance with laws and regulations, and maintaining financial stability. Finansinspektionen has a direct responsibility to supervise the individual institutions in the financial market. The Riksbank has an overall responsibility to promote a stable functioning of the financial system. In addition, the Swedish National Debt Office has the main role of handling banks in crisis and of being responsible for the deposit insurance scheme.

Contributor: Christian Nilsson christian.nilsson@swedishbankers.se

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