Sweden's Riksbank finds corporate bankruptcies have generated minimal bank loan losses but flags commercial real estate shock risk

Sweden's Riksbank has published an Economic Commentary analysing corporate bankruptcies and realised loan losses in Swedish banks over 2019–2023. It finds loan losses have been very low largely because firms that default typically have small bank exposures, while noting losses could rise if a severe shock hits a sector with large bank borrowing, particularly commercial real estate. Across 2019–2023, realised loan losses totalled around SEK 1.1 billion and the typical loss was only a few thousand kronor, with losses mainly linked to companies in construction, wholesale and retail trade, and commercial property. Just over half of bankrupt companies had bank loans, with a median loan size of SEK 3,500 at bankruptcy (average SEK 650,000) and a median longer-term loan of SEK 180,000; loan losses above SEK 10 million were described as extremely rare. The commentary also reports Swedish banks’ loan loss level at 0.06 per cent versus an EU average of 0.49 per cent (Q4 2024), alongside high use of collateral (83 per cent of corporate lending), and highlights that bank corporate lending is heavily concentrated in real estate even though bankruptcies are more common in other sectors. Using the Riksbank’s KRITA credit database linked to the Serrano Database, the authors caution that the period is short and includes the pandemic, and argue for further investigation into why Swedish loan losses are so low and what drives banks’ lending decisions.