STOCKHOLM (Reuters) - Shares in Sweden's Handelsbanken (ST:SHBa), which counts Britain as a home market with over 200 branches in the country, slid 9 percent on Monday over concerns about the impact of Brexit, putting them on track for their biggest one-day drop since 2009.
Handelsbanken, for which Britain is its fastest-growing home market, said it was monitoring the situation closely and that its initial assessment was that business would not be impacted.
"We have been working in the UK for many years and we are very well established," said press chief Johan Wallqvist. "The customer business is very local - local revenues, local costs - and so our assessment for the moment is that this won't affect us."
Citigroup (NYSE:C) took a different view and downgraded the Swedish bank to a sell in a note to clients.
It said Handelsbanken operated in Britain as a branch operation through "passporting" and might need to operate as a subsidiary post Brexit.
"This would lead to increased operational costs and potentially higher capital requirements and funding costs as the wholesale funding has to be issued by the UK sub," it wrote.
"SHB's recent rapid growth could significantly slow down as of result of Brexit. It is also yet to be tested through a potential turn of the UK credit cycle."
About 16 percent of Handelsbanken's 2015 net interest income was generated in Britain where it has operated since the early 1980s and now has branches in locations stretching from Inverness to Canterbury.
Nordic banks are normally viewed as safe haven assets by investors in times of uncertainty thanks to their solid capital levels and relatively high profitability.
Handelsbanken is one of the most well-capitalised lenders in Europe and also one of the most risk averse. Fitch upgraded the bank's rating to AA in May this year on a stable outlook, making it the only bank in Europe to have such a rating from the agency.
Fitch was not immediately available for comment.
Citigroup wrote in its note that it expected the impact from Brexit on earnings for the other Nordic banks such as Nordea (ST:NDA) - the region's biggest lender - would be muted due to its limited direct exposure to Britain.
Sweden's stock market was closed on Friday for the midsummer celebration and shares were catching up with major falls in global markets.
Handelsbanken shares were down 8.9 percent by 0907 GMT, compared to a 5.6 pct drop in Sweden's blue-chip index (OMXS30).
