Macroprudential decision: Systemically important banks in Finland designated and additional capital requirements imposed on them
Today the Board of the Financial Supervisory Authority (FIN-FSA) designated Nordea Bank Finland Plc, OP Group, Danske Bank Plc and Municipality Finance Plc as systemically important credit institutions. For these banks, the Board imposed an additional capital requirement, which has to be covered by Common Equity Tier 1 capital (CET1 capital). The new requirement must be fulfilled as of 7 January 2016.
The Finnish financial markets are highly concentrated. The largest credit institutions hold significant market shares in deposits, lending and payment services. In accordance with the Act on Credit Institutions and guidance from the European Banking Authority, the key position, in the financial system, of the credit institutions in question renders them systemically important.
– The additional capital requirements to be imposed should be calibrated so as to ensure sufficient risk resilience of banks operating in Finland and to help prevent disruptions in the financial markets, says Pentti Hakkarainen, Chairman of the Board of FIN-FSA. – After these additional requirements, the total capital requirements approach the level in the other Nordic countries and several other European countries and thus enhance the competitive neutrality of banks.
The capital adequacy of the Finnish banking sector is better than the newly disclosed requirement level, and the newly imposed additional capital requirements do not imply a need for systemically important credit institutions to raise additional capital.
| Additional capital requirements (so-called O-SII buffers) by credit institution | |
| Nordea Bank Finland Plc | 2.0 % |
| OP Group | 2.0 % |
| Danske Bank Plc | 0.5 % |
| Municipality Finance Plc | 0.5 % |
The Credit Institutions Act requires that FIN-FSA designates the systemically important credit institutions (the so-called O-SIIs) in Finland and the additional capital requirements imposed on them. According to the Act, the requirements will enter into force at the beginning of 2016. The O-SII requirements for individual credit institutions will become effective within six months of FIN-FSA’s decision.
The Board of FIN-FSA made its decision upon a proposal by the Director General of FIN-FSA after consultation with the Bank of Finland, the Ministry of Finance and the Ministry of Social Affairs and Health. All the parties involved were unanimously behind the decision. In accordance with the regulations governing the Single Supervisory Mechanism, the European Central Bank was notified of the decision and offered no objections to the decision in the regulated advance consultation.
For further information, please contact
- Pentti Hakkarainen, Chairman of the Board of FIN-FSA, tel. +358 10 831 2002
- Jyri Helenius, Head of Department, tel. +358 10 831 5312 (designation of O-SII credit institutions)
Appendices
- Board decision (pdf)
- Decision proposition by the Director General of FIN-FSA (in Finnish, pdf)
- Opinions (in Finnish, pdf)