Financial Stability Authority’s assessment: Narrow fiscal space highlights the importance of bank resolution capabilities

The purpose of the bank resolution system is to wind down or restructure the activities of banks facing financial problems by means of official measures, without public bank support.

“We know how little fiscal space we have the moment, so Finland cannot afford to commit billions of euros to saving banks. A credible and efficient resolution system requires significant advance preparedness from banks. According to our updated assessment, banks’ capabilities are good right now, even though there is still some room for improvement,” says Jaakko Weuro, Director General of the FFSA.

Bank resolution capabilities improved over 2024

According to an estimate published by the FFSA, Finnish banks had no critical shortcomings in their resolution capabilities at the end of 2025. The FFSA estimates that bank resolution capabilities are particularly good in the areas of loss absorption and recapitalisation as well as governance capabilities in resolution situations.

Compared to the assessment conducted at the end of 2024, banks have made progress particularly in their capacity to produce data for valuation and the use of resolution tools. However, there is still room for improvement in bank capabilities in some areas. In particular, banks need to develop continuity plans related to financial market infrastructures.

Depositors guaranteed in all situations

Instead of resolution, a bank may be declared bankrupt when resolution is not necessary. In this case, customer deposits are guaranteed up to EUR 100,000 through the Deposit Guarantee Scheme, and the FFSA pays depositors deposit guarantee compensation from its Deposit Guarantee Fund within seven working days.

Deposit banks must have the capability to provide depositor and account information to the FFSA in a timely and reliable manner. The FFSA regularly tests Finnish banks to ensure that they are able to provide the necessary depositor and account information in the required format, scope and schedule.

According to the FFSA’s assessment, deposit banks were well equipped to provide this information at the end of 2025.