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CRISIS IN SWEDISH BANKING
The collapse of the Swedish real-estate market, in the early autumn of 1990, turned Swedish banking into the worst industrial crisis in Swedish history. Total credit losses, for the period 1990-92, are now estimated to be more than SEK 100 billion for the banking sector (Affarsvarlden, 1992). In 1992 alone, as much as SEK 50 billion in credit losses may be generated, and the Swedish Government has, up to now, infused more than SEK 30 billion into banks in jeopardy. Large savings banks and cooperative banks, such as Forsta Sparbanken and Foreningsbanken, struggle for their survival. Major commercial banks, such as Gota Bank and the state-owned Nordbanken, must restore their capital bases.
Banks are now hit from two sides--credit losses and declining operating results. Because of the decline of total earnings in 1992, even more commercial banks are soon expected to need state support. In 1991, the total operating losses of the banking sector amounted to SEK 12 billion. In the first eight months of 1992 losses were already up at SEK 20 billion (Affarsvarlden, 1992). The Swedish Government is, therefore, expected soon to present its financial support package for the banks.
In coping with financial difficulties, and to cut costs and losses, Swedish banks have taken drastic measures which have caused public debate and concern. With an increasing number of firms going out of business, and a rising unemployment rate, public opinion in Sweden has become more negative as to how banks behave (Expressen, 1991). Among other things, they have been criticized for introducing new "hidden" transaction fees and having too large interest rate margins, which mainly affect private customers.
COMPETITION AND MIMETIC BANKING BEHAVIOUR
The deregulation of Swedish banking, during the latter part of the 1980s, led to increased competition among banks, forcing them to reduce costs and to develop new financial services (Bergendahl et al., 1990). Also, the number of collaborative agreements, mergers and cross-business ventures (e.g. insurance services) went up. Accordingly, banks became "financial supermarkets" of a wide range of financial services (Barker and Thiel, 1985) by automating services in newly developed information systems (e.g. home banking) (Channon, 1987).
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