Swedbank will raise 15 billion Swedish crowns ($2.1 billion) in a rights issue to boost a balance sheet hit by bad debts in the Baltics, the bank said on Monday, after saying in June it didn't need more capital.

Sweden's financial watchdog also said in June that the country's banks had enough capital to pass its worst-case stress test for $150 billion in Baltic loan losses, though that same day its central bank, the Riksbank, took a big loan from the European Central Bank to cushion the financial system.

In July, Swedbank also said it had a resilient capital situation.

The difference between what we said then and what we are doing now is that we can clearly say to the market that even if the Riksbank's stress scenario would happen, we would be well-capitalized, Chief Executive Officer Michael Wolf told Reuters to explain the decision after his comments in June.

The Baltic states, to which Swedbank is the most exposed of Nordic banks, have been particularly hard hit by the global downturn, with their most recent quarterly GDP figures shrinking by around a fifth.

It's a signal to our customers that we have the ability to support them through this recession, no matter what happens, said Wolf.

He also told analysts the lender stood by the outlook it gave for all its markets at its results briefing in July.

They give good reasons for the issue, said one analyst, who declined to be named. At the same time, this news raises suspicions about the situation in the Baltic countries and its Lehman exposure. Although the bank has not changed the guidance they gave in Q2, concerns have increased.

At 1151 GMT (6:51 a.m. EDT), Swedbank shares were down 4.9 percent at 62.75 crowns, having been down as much as 7 percent. The broader European banking sector <.SX7P> was down 3.2 percent.

CASH CALLS EPIDEMIC

Swedbank also made a $1.5 billion cash call last year, and other banks exposed to emerging Europe, such as SEB , Nordea , Poland's PKO

and National Bank of Greece , have also asked shareholders for cash to face the worst recession in decades.

Like Swedbank, those banks said they did not desperately need the capital but were exploiting improving market sentiment to raise money opportunistically.

Swedbank's call will take advantage of a recent rally that has added 25 percent to its share price in three months.

It seems like an opportunistic time to raise capital, Merrill Lynch said in a note, adding that its tier 1 capital ratio after the issue would compare favorably with both Nordic and European peers.

CEO Wolf said Swedbank was raising the funds from a position of strength after taking steps to lower its risk profile in the second quarter.

Alexander Plenk, an analyst at UniCredit, was positive about the new issue: In case the situation should deteriorate even more, they can still come back to the Swedish government. So from a credit perspective it is very positive.

No major Swedish bank has been forced to take money from the Swedish government, though SEB and Swedbank are both participating in the state's loan guarantee program.

Swedbank said the issue was fully underwritten and would help it keep lending to markets at the sharp end of the recession and stabilize its financial base without state help.

The bank said existing shareholders had undertaken to subscribe for and underwrite 46.6 percent of the offering, while BofA Merrill Lynch and Credit Suisse would underwrite the rest.

The rights issue is subject to approval at an extraordinary general meeting on September 15. The bank said shareholders with 31.3 percent of outstanding shares had undertaken to vote in favor, and another 4.7 percent said they intended to.

($1=7.134 Swedish Crown)

(Reporting by Katarina Gustafsson, Fanny Modin, Anna Ringstrom, Jens Hansegard, Boris Groendahl, John Stonestreet, editing by Will Waterman)

Poland Investment Merrill Lynch Bank of america