Swedish FSA says banks need more capital for commercial real estate risks

Sweden's financial system is robust but banks should have larger capital buffers to deal with potential risks in lending to the commercial real estate sector, the financial watchdog said on Tuesday.

STOCKHOLM, May 28 (Reuters) - Sweden's financial system is robust but banks should have larger capital buffers to deal with potential risks in lending to the commercial real estate sector, the financial watchdog said on Tuesday.

The FSA said lenders had sufficient resilience to meet an economic downturn.

"However, commercial real estate firms are vulnerable to shocks," the FSA said in its twice-yearly Financial Stability Report.

It "therefore makes the assessment that the banks need more capital for these exposures."

(Reporting by Simon Johnson)

((simon.c.johnson@thomsonreuters.com; +46 8 700 1045; Reuters Messaging: simon.c.johnson.reuters.com@reuters.net))

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