Mats Odell, the minister for local government and financial markets, said Swedish banks were still exposed to too much risk for the loan guarantee program to end. Sweden's banks are highly-exposed in the troubled Baltic states' economies.

TALLINN — The Swedish government announced Wednesday that it is going to extend the guarantee program for the country’s banks, which have accumulated massive losses in the Baltics, until the end of June.

The Swedish government set up a 1.5 trillion kronor (€154 billion) guarantee plan in the fall of 2008 to stabilize the country’s financial system in the wake of the Wall Street crisis — with an expiration date on April 30, 2010. The measure enables the banks to take state-guaranteed loans.

“The situation on the financial markets has improved but ending the program would be premature. With extending the guarantee program by two months is the Swedish program in consistency with similar measures in other countries,” said Mats Odell, the minister for local government and financial markets.

Both SEB and Swedbank declared enormous losses in the Baltic states last year. SEB Estonia’s loss was a 1.53 billion krooni (€97,8 million) loss, mostly originating from bad loans. Meanwhile SEB Group’s loan deficit in 2009 was 3.16 billion Swedish kronor (€323.6 million), and 82 percent of it accumulated in the Baltic states, three of the worst-performing economies in the world.

Swedbank’s Estonian subsidiary ended with a bit softer fall by losing 1.1 billion krooni (€70.3 million) in 2009. Yet, the bank’s loan losses of 3.8 billion krooni (€245 million) is far greater than SEB’s. Swedbank Group’s total deficit was €1 billion — smaller than in 2008, and earnings per share were €1 billion.

This article is free to view. To read Baltic Reports’ subscription-only articles, click here.