Swedish lender Skandinaviska Enskilda Banken on Wednesday said it expects its risk exposure amount to increase by about 5% following discussions with authorities over its internal risk models.
The increase is related to further work required on the bank's Internal Ratings-Based, or IRB, models for its subsidiaries in the Baltic region, the company said in a statement.
Banks use IRB models to calculate their capital requirements for credit risk, subject to regulatory approval.
SEB said the increase is expected to be transitory and would be gradually implemented, likely commencing towards the end of 2025 or the beginning of 2026.
The capital add-on and the increase in the risk exposure amount are expected to remain in place until final model approvals are received, which the company said is expected to take a number of years.
The final outcome on the risk exposure amount is subject to regulatory approval, SEB added.
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