Sweden

Sweden’s Riksbank is expected to raise interest rates to zero per cent on Thursday, ending a five-year experiment with negative interest rates and becoming the first central bank in the world to ditch the controversial policy, the Financial Times reported. But with the Nordic economy slowing, some traders are already betting that Sweden may struggle to leave behind sub-zero rates for long. The bank’s monetary policy committee is scheduled to announce its decision on borrowing costs on Thursday.

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Nynas AB, owned by Venezuela’s state-run PDVSA and Finland’s Neste Oil, on Friday filed for company reorganization at a Swedish court as the refiner failed to extend loans as it dealt with the fallout of U.S. sanctions, Reuters reported. Swedish Nynas’ business has suffered as the United States in October introduced changes to a license that had allowed it to import Venezuelan oil despite sanctions imposed on its owner PDVSA.
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Sweden’s central bank is this month expected to swim against the tide of global monetary policy by raising interest rates even as the Scandinavian country’s economy softens, the Financial Times reported. A manufacturing sentiment survey published on Monday showed the lowest activity reading since 2012, the latest in a series of gloomy economic data. Growth in the third quarter was weaker than the Riksbank expected, according to figures released on Friday, which showed the economy grew 0.3 per cent compared with the previous quarter and 1.6 per cent year on year.

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Sweden’s central bank plans still to raise interest rates this year or early next but increases would then be at a slower pace than previously forecast, prompting the currency to rally against the euro in early trading, the Financial Times reported. The Riksbank, in a statement on Thursday accompanying its decision to keep rates on hold at minus 0.25 per cent, said that “as before” borrowing costs “are expected to be raised towards the end of the year or at the beginning of next year”.

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A potential crashing out of the EU by the UK would be the “greatest risk to the Swedish financial system” over the next six months as market participants felt that domestic factors had faded in comparison, Sweden’s central bank found in a survey, the Financial Times reported. “The risk of a disorderly UK withdrawal from the EU is the foremost risk factor for the Swedish financial system in the period ahead,” the Riksbank, in its six-month study on the Swedish fixed-income and foreign exchange markets, said on Wednesday.

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Piraeus Bank, the biggest Greek lender, has announced a partnership with Sweden’s Intrum group to reduce a €7bn pile of bad loans that has been holding back its capacity to finance companies that survived the country’s economic crisis, the Financial Times reported. The €410m deal will create a new Greek debt collection business 80 per cent owned by Intrum and 20 per cent by Piraeus. However, the bank’s non-performing debt, which amounts to almost half the loan book, will remain on its balance sheet.

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Sweden’s Riksbank said it will hold its main rate steady longer than previously expected and announced an 18-month bond-buying programme to start from July — the latest major central bank to take a more dovish shift on monetary policy. The Riksbank, which on Thursday kept its repo rate at a quarter of a point below zero, said it will purchase government bonds for a nominal value of SKr45bn (€4.2bn) from July until December 2020. It added that its benchmark interest rate will remain at minus 0.25 per cent “for a somewhat longer period of time than was forecast in February”.

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Sweden's Skanska does not expect to hit an operating margin target for its construction business this year or next, sending its shares down nearly 3 percent on Wednesday, the International New York Times reported on a Reuters story. The Nordic region's biggest building firm, which is also one of the largest in the United States, is restructuring its construction division due to weak profitability and project writedowns, mainly in Poland and the United States.

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However bad a spiralling money laundering scandal has been to the three Baltic countries, it could get even worse. Financial regulators in Estonia and Latvia told the Financial Times they were afraid Swedish banks — which dominate both headlines on money laundering and their banking systems — could withdraw from the region, just as Danske Bank and Nordea have already done amid dirty money allegations, the Financial Times reported. “Sure, we are very worried,” said Peters Putnins, head of the Latvian regulator.

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Residential skyscrapers are rare in Stockholm, a city permeated by five-story, classic stone buildings built at the turn of the last century. That’s now changing, Bloomberg News reported. The most spectacular addition to the skyline is nearing completion: A 125-meter, brutalist structure that could be mistaken for a tower of Lego blocks. Innovationen offers panorama windows and balconies overlooking the red, yellow and orange facades of the Vasastan neighborhood.

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