Swedish banks told to rely on deposits more

[STOCKHOLM] Swedish Finance Minister Anders Borg wants banks in the largest Nordic economy to rely more on traditional deposits than on wholesale debt markets to finance their mortgage lending.

"In the long-term, I think we can find financing models for mortgages that focus more on deposits and less on expensive funding," Mr Borg said in a Nov 8 interview in Stockholm. "That way Sweden should end up with lower costs for mortgage funding in the long term in the same way that we're seeing in our neighbouring countries."

Mr Borg, whose warnings in the past have frequently led to regulatory adjustments, has long urged banks in Sweden to cut their reliance on short-term foreign currency funding. He's now broadening that criticism to include mortgage finance, which lenders mostly do through covered bonds, much of it in dollars and euros.