Kapitalstyrkan

Kapitalstyrkan, a term used in Nordic financial contexts, describes the capacity of a company, especially banks, to absorb losses and meet its obligations from its capital base. It is a core measure of financial resilience and solvency, reflecting how well an institution can withstand adverse conditions without failing or needing external support.

Key components of kapitalstyrkan include the capital base (equity and other instruments classified as Tier 1 and Tier 2), and the exposure to risk through risk-weighted assets. The primary metrics are capital adequacy ratios such as the Common Equity Tier 1 (CET1) ratio, the total capital ratio, and the leverage ratio. A higher kapitalstyrkan indicates greater loss-absorbing capacity and durability in downturns, improving stability and lending capacity.

Regulatory frameworks define minimum expectations for kapitalstyrkan. Under Basel III and national adaptations, Pillar 1 sets minimum levels of CET1 and total capital relative to risk-weighted assets, while additional buffers (such as the capital conservation buffer and countercyclical buffer) may apply. Institutions may also hold Additional Tier 1 and Tier 2 capital to meet total requirements. Supervisory authorities may run stress tests and require capital planning to ensure adequate kapitalstyrkan under stressed scenarios.

Practically, institutions aim to improve kapitalstyrkan by retaining earnings, issuing common equity, or issuing instruments counted as Tier 1 or Tier 2 capital. A strong kapitalstyrkan supports sustainable lending, favorable credit ratings, and market confidence, whereas a weaker position can lead to higher funding costs and tighter regulatory scrutiny. It is a dynamic, multi-faceted assessment influenced by asset quality, profitability, and macroeconomic conditions.