Annual report 2014: The financial sector must prepare for a deterioration in the operating environment
Even though the economic situation appears relatively stable at the moment, the financial sector must remain prepared for a deterioration in the operating environment.
‘In order to prepare for the risks stemming from the uncertain state of the economy, European regulators have required banks and insurance companies to maintain sufficient capital buffers and recommended supervised entities to pursue a conservative dividend distribution policy,’ FIN-FSA Director General Anneli Tuominen points out in the Financial Supervisory Authority's Annual Report for 2014.
New macroprudential tools for FIN-FSA
A significant regulative reform entered into force at the beginning of 2015, when the Financial Supervisory Authority was vested with powers to tighten the capital requirements for banks, in particular if lending growth reaches unsustainable levels relative to economic growth.
‘National authorities have lacked the tools to intervene in time to curb the excessive growth in their domestic credit markets. Therefore, it was deemed important to lay down a Directive on the use of the macroprudential tools and, furthermore, to provide the ECB with the possibility to increase the additional capital requirements proposed by the respective national supervisory authorities,’ Director General Tuominen explains.
‘The Single Supervisory Mechanism has not only increased national supervisors’ understanding of the risks of the euro area banking sector as a whole; it has also harmonised supervision in the euro area and tightened discipline within the euro area banking sector and in banking supervision,’ Tuominen continues.
Board’s report delivered to Parliamentary Supervisory Council
The FIN-FSA Board has on March 12 delivered its report to the Parliamentary Supervisory Council on the operational objectives of FIN-FSA and their achievement. The Parliamentary Supervisory Council generally issues its response to the report within two or three months. The activities of FIN-FSA are conducted under the auspices of the Board, while the Parliamentary Supervisory Council supervises the overall expediency and efficiency of FIN-FSA’s activities.
For further information, please contact
- Annual Report 2014: Director General Anneli Tuominen, tel. 010 831 5300
- The Board’s report to the Parliamentary Supervisory Council 2014: Senior Legal Advisor Pirjo Kyyrönen, tel. 010 831 5280
Read the reports
- Annual Report 2014 (in Finnish, pdf)
- The Board’s report to the Parliamentary Supervisory Council 2014 (in Finnish, pdf)
The Annual Report 2014 will be published in English in April 2015.