How Swedish Bank Rescue Affects Current Behavior
Yet if you look at their actions you instead get the impression that they are losing a lot of money as all of them except Handelsbanken have decided to issue new shares to increase their capital. And all of them have decided to either cancel dividends altogether or reducing them. Even Handelsbanken is cutting its dividend (though not by muc, only from SEK 8.5O per share to SEK 7 per share.) despite the fact that it is experiencing rising profits.
Assuming their profits aren't a result of them having hired some real life Dogbert to cook their books (which seems far-fetched), this behavior can only be explained as a pre-emptive move from the banks to increase their equity so much that there is no way that they'll need a government bailout. Why is it then so important for them to avoid that?
Well, because they learned from the Swedish bank bailouts of the early 1990s (that I've described in detail here) that the Swedish government will only bail out creditors. Shareholders by contrast will be wiped out instead of bailed out. It wasn't just a matter of taking an equity position (something which would still constitute a bailout of existing owners) but ensuring that existing owners would meet the same fate as if the bank went bankrupt. And the current Swedish government has made it clear that they would be no more generous. And so, this has clearly had the effect of inducing current owners to invest enough in the banks so that their previous investments won't be lost. This is a clear illustration of the absence of bailouts promotes good behavior.
By contrast, there are no indications that creditors have been more prudent in Sweden than anywhere else, as creditors were bailed out.