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Svenska Skeppshypotekskassan’s corporate form should be reviewed

The Swedish State formed Svenska Skeppshypotekskassan to provide loans to Swedish shipping companies. Today, Svenska Skeppshypotekskassan conducts extensive credit operations with no yield requirement or satisfactory means of central government governance. The Swedish National Audit Office (Swedish NAO) recommends that the corporate form be reviewed and that the question of state aid be investigated.

Vessel in dock.

Photo: Mikael Svensson

Svenska Skeppshypotekskassan was formed in 1929, with the task of lending money to shipping companies in order to strengthen the Swedish merchant fleet in the growing international competition after the First World War,

Its operations have not changed significantly since then and today it is the only remaining mortgage institution (hypotekskassa) within the central government sector, with equity of SEK 2 billion and lending of almost SEK 9 billion.

The Swedish NAO has examined whether Svenska Skeppshypotekskassan has an appropriate corporate form. The overall assessment is that this is not the case.

“Svenska Skeppshypotekskassan is neither a company, a government agency nor any other commonly occurring corporate form within the central government sector. The Government has limited insight into the operations and can only exercise control by appointing board members,” says Auditor General Stefan Lundgren.

The Riksdag has previously decided that central government activities must primarily be conducted by agencies, but that in some cases state-owned companies may be justified – especially in markets which are exposed to competition.

Svenska Skeppshypotekskassan operates on a commercial market in competition with other credit institutions. However, unlike these, Svenska Skeppshypotekskassan does not have to pay income tax. Nor are there any requirements for dividends or returns to an owner.

Overall, these constitute competitive advantages which may be a form of state aid not approved by the EU.

“The Swedish NAO does not take a standpoint on whether the competitive advantages constitute state aid, but notes that no reporting to the European Commission has occurred, despite the question having been raised several times,” says Gunilla Lundquist, project leader for the audit.

Recommendations

The Swedish National Audit Office recommends that the Government

  • reviews the corporate form and takes a definite standpoint on this, where one possibility is a limited liability company.
  • orders an inquiry as to whether Svenska Skeppshypotek is in receipt of state aid.

Press contact: Olle Castelius, phone: +46 8-5171 40 04.

Presskontakt: , telefon: 08-5171 42 06.

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Updated: 15 January 2020

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