Tips from an ageing model

ASK almost any banker in New York or London whether banks can have strong capital ratios and still generate mouthwatering returns for shareholders, and they will probably think you a fool. A doubling of the capital a bank has will, all else being equal, halve the bank’s return on equity (ROE). For most bankers there is an uneasy tension between making banks safer and making them attractive investments. Developments in Sweden, however, suggest it is possible to have both safety and profitability.