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Country Commercial Guides for FY 2000: Sweden Report prepared by U.S. Embassy Stockholm, released July, 1999 Note*

VIII. TRADE AND PROJECT FINANCING

- Description of Banking System

Credit-market institutions in Sweden fall into two main categories, banking institutions and capital-market institutions. In addition to the Central Bank, there are two main types of banks: joint-stock banks (commercial banks) and savings banks. There are also a couple of so called 'member-banks', i.e. banks formed as economic associations. All the above-mentioned types of banks are - since the amendment of banking legislation in 1969 - entitled to operate in all areas of banking.

In 1986, Sweden issued a charter ('oktroj') for the first 12 foreign-owned commercial banks and since 1990 foreign-owned banks have been entitled to open branch offices in Sweden. These branch offices have primarily concentrated on servicing the business sector. Also in 1990, the restrictions concerning foreign ownership of Swedish bank stock were abolished.

The banks' activities are subject to close supervision by the Swedish Finance Inspectorate (Finansinspektionen) to ensure that all necessary standards are met. Swedish banks' financial statements meet the international standards well and are audited by internationally recognized auditors only.

Several Swedish banks suffered substantial credit losses in early 1990's due to economic recession. Factors contributing to the bank crisis were deregulation ofthe sector, followed by sharply expanded lending (especially for real estate acquisition) during a period of rapid inflation in the second half of the 1980's, and the subsequent bursting of the bubble when real estate prices collapsed toward the end of the decade. As the bank crisis accelerated in 1992,the government had to engage itself in a series of ad hoc rescue efforts to guarantee the commitments of banks and mortgage institutions toward their depositors and investors and a special agency the Bank Support Council, was set up to manage the assistance program. The State guarantee was replaced in 1996 by a deposit guarantee, based on EU-directives.

The number of banks in Sweden has decreased substantially through mergers, reaching even beyond the boundaries of Sweden, e.g. the fusion between Nordbanken and the Finnish bank Merita forming the MeritaNordbanken Group. The total number of commercial banks in Sweden in January 1999 was 32, out of which 15 were foreign affiliates. Meanwhile new, smaller, so-called 'niche banks' have been established. These banks tend to concentrate on certain areas of banking services or methods of banking, e.g. 'dial-in' banks for banking services by telephone. All major banks are also offering virtual banking services through Internet.

The largest banks are Nordbanken (MeritaNordbanken Groups's bank in Sweden), Skandinaviska Enskilda Banken, Svenska Handelsbanken and Foreningssparbanken (Swedbank; The Savings Bank Foundation.)

The American banks and financial institutions represented in Sweden are Citibank and GE Capital Bank.

- Foreign Exchange Controls Affecting Trading

Foreign exchange restrictions in Sweden were removed in 1991. Commercial transactions are in general not subject to any restrictions. There are no restrictions on remittances of profits, or from investment liquidation proceeds. Royalty and license fee payments may be freely transferred out of Sweden. Moreover, yields on invested funds, such as dividends and interest receipts, are usually freely transferred.

- General Financing Availability

Sweden does not offer special tax or other inducements to attract foreign capital. Foreign-owned companies enjoy the same access as Swedish-owned enterprises to the country's credit market and government-sponsored incentives to business.

- How to finance exports/Methods of Payment

The Swedish Government provides basic export promotion support through the Swedish Trade Council, financed jointly with Swedish industry.

There are two general risks in the financing of foreign trade: the credit risk and the foreign exchange risk although the latter can be avoided by quoting sales in dollars only. Prepayment and letters of credit involve the least risk for the exporter but are not necessarily conducive to increase in sales. After the exporter/importer relationship has been established, U.S. exporters should be open to and consider other trade credit terms.

- Types of available export financing and insurance - Project financing available

Swedish Export Credit Corporation, financed by the Swedish Government and Swedish industry grants medium- and long-term credits to finance exports of capital goods and large-scale service projects.

- List of banks with correspondent U.S. banking arrangement

Nordbanken AB Nordbanken U.S.
Smalandsgatan 17 450 Park Avenue
S-105 71 Stockholm Suite 1401-14th
Tel: Int/46/8-614 7000 New York, NY 10022
Fax: Int/46/8-200846 Tel: (212) 755 3800
http://www.nb.se Fax: (212) 755 1304

Svenska Handelsbanken AB Svenska Handelsbanken
Kungstradgardsgatan 2 153 East 53rd Street, 37 floor
S-106 70 Stockholm New York, NY 10022-4678
Tel: Int/46/8-701 1000 Tel: (212) 326-5100
Fax: Int/46/8-701 4835 Fax: (212) 326-5196
http://www.handelsbanken.se

SE-Banken Skandinaviska Enskilda Banken
Kungstradgardsgatan 8 245 Park Avenue, 42 floor
S-106 40 Stockholm New York, NY 10167
Tel: Int/46/8-763 8000 Tel: (212) 907-4700
Fax: Int/46/8-763 7163 Fax: (212) 370-1709
http://www.sebank.se

Citibank Citibank
Box 1422 399 Park Avenue
S-111 84 Stockholm New York, NY 10043
Tel. Int/46/8-723 3400 Tel. (212) 559-1000
Fax Int/46/8-611 4843 Fax (212) 759-3973
www.citibank.com