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"We have seen it before, and we'll get through it again," says one senior lawyer. "It might sound funny, but we benefit now from the nasty experience we gained in 1992....

"We have seen it before, and we'll get through it again," says one senior lawyer. "It might sound funny, but we benefit now from the nasty experience we gained in 1992."

The financial crisis that has spread through the US and Europe's banks is not an entirely new experience for the Swedes. The country had to rescue its banks in the early 1990s after an oversupply of cheap credit fuelled house prices until the bubble burst, causing a freefall in real estate prices and the devaluation of the Swedish krona by almost 30% in 1993.

The country recovered impressively from this banking crisis by isolating toxic assets and carefully managing the recapitalisation of the banks. Sweden's approach to deal with its financial crisis was mentioned as "a model for the future" at the Davos Economic summit in Switzerland and in several American and European media publications. "We have been praised around the world [for] how we handled our crisis," says one lawyer. "The world can learn from that and some countries are copying our model."

The model led to strong finances and underlying fundamentals so when the Swedish economy entered into recession in the last few months of 2008 and export demands fell sharply, Sweden announced a $260 billion rescue package in October 2008 for the banking sector and used similar methods as in the early 1990s. A combination of additional recapitalisation, the use of an aggregator bank to buy bad assets from banks and nationalisation prevented Sweden from the worst in the last two years.

In February 2009 another $6 billion was pumped into the banks. Practically all Swedish banks participated in the rescue scheme with Swedbank, Sweden's biggest bank, receiving the most money. The car industry was also supported, with $2.43 billion pumped into the main manufacturers.

"Let's hope that money will make a difference and will make the engines running again," says one lawyer. "In the Nordic [countries] a lot of banking business lawyers have turned into restructuring lawyers, but we do not like to do that for too long."

The economically stable economy of Sweden has been tested in the last twelve months. Sweden has not been immune from crashing stock markets in the US, collapsed banks in Iceland or neighbouring countries feeling the pinch of the credit crunch....

The economically stable economy of Sweden has been tested in the last twelve months. Sweden has not been immune from crashing stock markets in the US, collapsed banks in Iceland or neighbouring countries feeling the pinch of the credit crunch.

A sharp decrease at the Stockholm Stock Exchange this year has all but silenced the capital markets in Sweden. "It is very quiet," says one senior lawyer. "There is a lack of finance. Compared to one or two years ago it is very quiet." While only three IPOs were conducted this year (up from one in 2008), rights issues have been the only thing keeping capital markets departments ticking over.

But there was plenty of non-transactional activity in the market. While there were some lateral movements by a handful of respected senior capital market lawyers, the big news was the entrance of Finland's Hannes Snellman into the market.

Lawyers remain positive and many believe the worst will soon be over, although it will take some time. "I think we will see some action, not until late 2009 probably," says one senior lawyer. "Most players are wary and waiting to see how the market is going."

Since the financial storm reached Sweden, the M&A market has significantly calmed down. It is much harder for companies to get financing, with banks not eager to finance risky takeovers....

Since the financial storm reached Sweden, the M&A market has significantly calmed down. It is much harder for companies to get financing, with banks not eager to finance risky takeovers. "The amount of transactions is much less than a year ago, the market is much slower," says one senior lawyer. "It takes much more time for a deal to come through."

Unsurprisingly the Swedish government's privatisation programme was a key source of work for firms. Privatisations included the sale of Vodka maker Vin & Spirit, real-estate firm Vasakronan, a stake in the stock exchange OMX, and a small share in the telecommunications company TeliaSonera. This generated a lot of work for all the big firms; especially Cederquist, who worked for the government.

With many companies' share prices declining, and with private equity virtually coming to a standstill, many industrial buyers have decided to take advantage of the public M&A market.

"2008 was a relatively good year, especially when you compare it to other countries," says one senior lawyer. "It seems there is a survival of the fittest going on, with many investors looking for bargains and cheap opportunities."