MNI Riksbank Analysis – Implications Of The Recapitalisation

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The Riksbank announced on January 10 that, to restore its equity to basic levels, it would require a capital injection of approximately SEK40bln from the Riksdag. Initial estimates, announced on Oct 24, 2023, looked for an injection of closer to SEK80bln.

• In this publication, we provide details of why the Riksbank are mandated to petition for a capital injection and discuss scenarios where the Riksbank may petition for more or less than the SEK40bln currently estimated.
• While there is no precedent to rely upon, the most obvious mechanism for financing the recapitalisation is through increased debt issuance by the National Debt Office. However, questions remain on the structure of such additional issuance (e.g. whether funded via bonds or bills, or if the issuance would be spread over several years). We provide analyst views on this topic in Section 3.
• Overall, the upcoming request for a capital injection appears to be the first step of many in recapitalising the Riksbank for the long-term. We remain watchful of additional announcements through the year on this topic.

For our full PDF analysis, including a petition size scenario analysis, analyst views and MNI Policy Team exclusives, please see the following link:

MNI Riksbank Capital Injection.pdf