Sweden Banking Crisis 1992
About Sweden Banking Crisis 1992
Sweden experienced a severe banking crisis in the early 1990s after a real estate and credit boom. Banks had lent heavily against commercial property. When the bubble burst, major banks including Nordbanken and Gota Bank faced insolvency. Sweden nationalized Nordbanken and Gota Bank. The government guaranteed all bank obligations. Bad assets were transferred to separate asset management companies. Sweden also took equity stakes in banks, requiring existing shareholders to bear losses first. The crisis cost about 2 percent of GDP, but Sweden recovered much of the cost by selling assets and shares later. The Swedish response became a model for handling banking crises and influenced the 2008 bailouts.
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