Wednesday, March 12, 2008

Slowed Swedish Privatization

Source: Sweden privatization scheme faces delays

It appears that Sweden’s privatization program, a campaign promise made by the centre-right government nearly 18 months ago, is the most recent victim of the turmoil in the global financial markets. The government, led by Prime Minister Fredrik Reinfeldt, is in the process of selling interests in six separate companies by 2010, including the banking group Nordea, mortgage lender SBAB, and TeliaSonera, a telecommunications company. This plan marks a clear break from Sweden’s socialist past, which allowed the free market a greater controlling influence in the economy.

Minister for Financial Markets, Mats Odell stated that the government is “evaluating time and price,” and that “it is possible that subprime events will have repercussions on our agenda.” He maintained that he is confident that the government will reach its original goal of raising SKr200bn ($33bn, £16bn) by 2010, but admitted that it might not be able to sell all six companies as originally planned. So far, the government has raised only SKr18bn from the sale of 8% of its 45% stake in TeliaSonera and SKr2.2bn from the sale of its 6.6% interest in OMX, a stock market company.

Mr. Odell acknowledged that the current market presents particular challenges to two of its planned sales—SBAB, a mortgage lender, and Nordea, a bank. Although the government plans to sell 100% of its interest in SBAB, Mr. Odell said that this sale might need to be put on hold, because “mortgage lenders are not exactly the top of everyone’s list.” Similarly, the government intends to sell its 19.9% interest in Nordea, but, again, Mr. Odell acknowledged that the markets are not ideal for selling banks.

The program is expected to receive a boost in the next few weeks, however, when the government announces the sale of Vin & Sprit, the maker of Absolut Vodka, for up to $7bn. Additionally, the government hopes to sell its 100% interest in Vasakronan, a property company, as the property market is showing early signs of weakening.

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