Finanssivalvonta

Macroprudential decision: FIN-FSA Board lowers credit institutions’ capital requirements

Share

At its extraordinary meeting today, the Board of the Financial Supervisory Authority (FIN-FSA) decided to lower Finnish credit institutions’ capital requirements. The reduction is implemented by removing the systemic risk buffer and by adjusting credit institution-specific requirements so that the structural buffer requirements of all credit institutions will fall by 1 percentage point, all in all.

“The coronavirus pandemic has significantly weakened the economic situation and the operating conditions of the financial sector in Finland. The FIN-FSA Board announced on 15 March that it had launched work on a rapid review of the level of capital requirements within the scope of national decision-making. With the decision taken now, the Board will significantly improve Finnish banks’ ability to supply credit to households and businesses,” says Marja Nykänen, Chair of the FIN-FSA Board.

The decision of the FIN-FSA will increase the lending capacity of theFinnish banks by around EUR 52 billion. This, together with the decisions of the macroprudential supervisors of other countries, is estimated to increase the imputed lending capacity of credit institutions to Finnish businesses and households by EUR 30 billion. The actual effects of the decisions will depend on the measures taken by the credit institutions themselves. The FIN-FSA will closely monitor that banks use the positive effects of these measures to mitigate the impact of the crisis and not to channel them into the payment of dividends or performance bonuses.

Structural macroprudential buffers, i.e. systemic risk buffers, are set primarily in case of serious problems in the banking sector. In the current extremely exceptional circumstances, however, it is justified to lower the buffers to prevent the weakening of credit institutions’ ability to provide credit to the corporate sector, in particular. In order to ensure the functioning of the financial system, it is important that the risk-bearing capacity of the credit institutions sector also remains adequate in the future.

The decisions taken now will, at the same time, promote a smooth transition to regulation that will change with the EU’s new ‘banking package’ at the beginning of next year. The decisions also take into account the future guidelines of the European Central Bank on credit institution-specific macroprudential buffers and the proportionality of these requirements. The decision is preliminary and the final decision will be made after the procedures laid down in EU regulation.

Of the additional capital requirements imposed, only the higher one is binding in accordance with the table below:

  Nordea OP Financial Group Municipal Finance Plc Other credit institutions
Additional capital requirement for G-SII/Bs - - - -
Additional capital requirement for O-SII/Bs 2.0% (2.0%) 1.0% (2.0%) 0.5% (0.5%) -
Additional capital requirement based on systemic risk buffer 0% (3.0%) 0% (2.0%) 0% (1.5%) 0% (1.0%)
Obligatory additional capital requirement 2,0% (3.0%) 1,0% (2.0%) 0,5% (1.5%) 0% (1.0%)

The table presents the additional capital requirements in accordance with the FIN-FSA Board decision (the requirements currently in force in brackets).

At its meeting, the FIN-FSA Board also decided that it will not set a countercyclical capital buffer (CCyB) requirement for banks and other credit institutions and that the loan cap for residential mortgage loans other than first-home loans will remain at 85% in line with the Board’s previous decision.

The Board of the Financial Supervisory Authority assesses quarterly the short- and long-term risks to the stability of Finland’s financial system. If necessary, the Board may tighten or relax the so-called macroprudential instruments, which promote stability. The Board decides quarterly on the levels of the countercyclical capital buffer (CCyB) and the maximum loan-to-collateral (LTC) ratio. The levels of the systemic risk buffer and the additional capital requirements for nationally systemically important institutions (O-SII buffers) are reviewed annually. If the situation so requires, the Board may also make the required decisions in a different schedule.

Appendices

Attachments will be published on website www.finanssivalvonta.fion 18 March 2020.

  • Board’s decision on the application of macroprudential instruments (pdf)
  • Board’s decision on the lowering of credit institutions’ capital requirements (pdf)
  • Proposal of the Director General of the FIN-FSA, circulated for comment, on the application of macroprudential instruments (pdf, in Finnish)
  • Proposal of the Director General of the FIN-FSA, circulated for comment, on the lowering of credit institutions’ capital requirements (pdf, in Finnish)
  • Opinions on the Director General’s proposal on the application of macroprudential instruments (in Finnish, pdf)
    • Bank of Finland
    • Ministry of Finance
    • Ministry of Social Affairs and Health
  • Opinions on the Director General’s proposal on the lowering of credit institutions’ capital requirements (pdf, in Finnish)
    • Bank of Finland
    • Ministry of Finance
    • Ministry of Social Affairs and Health

Keywords

Contacts

Marja Nykänen, Chair of the Board of the Financial Supervisory Authority, tel. +358 9 183 2007

About Finanssivalvonta

Finanssivalvonta
Finanssivalvonta
PL 103, Snellmaninkatu 6
00100 Helsinki

09 183 51https://www.finanssivalvonta.fi/

Finanssivalvonta, or the Financial Supervisory Authority (FIN-FSA), is the authority for supervision of Finland’s financial and insurance sectors. The entities supervised by the authority include banks, insurance and pension companies as well as other companies operating in the insurance sector, investment firms, fund management companies and the Helsinki Stock Exchange. We foster financial stability and confidence in the financial markets and enhance protection for customers, investors and the insured.

Subscribe to releases from Finanssivalvonta

Subscribe to all the latest releases from Finanssivalvonta by registering your e-mail address below. You can unsubscribe at any time.

Latest releases from Finanssivalvonta

European Central Bank elaborated on its guidance on regulatory flexibility – FIN-FSA: All measures must be channelled to alleviating the impacts of the pandemic20.3.2020 20:33:18 EETPress release

The European Central Bank announced today further information on measures to support the ability of banks under its direct supervision to respond to the coronavirus situation and to continue funding households and corporations. The ECB clarified its press release of 12 March on relief measures concerning certain additional capital and liquidity requirements.

Europeiska centralbanken har preciserat sin vägledning om lättnader i regleringen – Finansinspektionen: Alla lättnader ska kanaliseras till att lindra effekterna av pandemin20.3.2020 20:27:07 EETTiedote

Europeiska centralbanken har i dag publicerat mer information om de åtgärder som banken vidtar för att stödja bankerna under dess direkta tillsyn så att de kan bemöta coronavirusläget och fortsätta att finansiera hushåll och företag. ECB har preciserat sitt pressmeddelande av den 12 mars om lättnaderna beträffande vissa buffert- och likviditetskrav.

Euroopan keskuspankki täsmentänyt ohjeistustaan sääntelyn joustoista – Finanssivalvonta: Kaikki joustot tulee kanavoida pandemian vaikutusten lieventämiseen20.3.2020 19:00:26 EETTiedote

Euroopan keskuspankki on tänään julkistanut lisätietoa toimista, joilla se pyrkii tukemaan sen suorassa valvonnassa olevien pankkien kykyä vastata koronavirustilanteeseen ja jatkaa kotitalouksien ja yritysten rahoittamista. EKP on selventänyt 12.3. antamaansa tiedotetta tiettyjä lisäpääoma- ja likviditeettivaatimuksia koskevista helpotuksista.

Makrovakauspäätös: Finanssivalvonnan johtokunta laskee luottolaitosten pääomavaatimuksia17.3.2020 22:10:00 EETTiedote

Finanssivalvonnan johtokunta päätti tänään ylimääräisessä kokouksessaan laskea suomalaisten luottolaitosten pääomavaatimuksia. Kevennys toteutetaan poistamalla järjestelmäriskipuskuri ja muuttamalla luottolaitoskohtaisia vaatimuksia siten, että kaikkien luottolaitosten rakenteelliset puskurivaatimukset laskevat kokonaisuudessaan yhdellä prosenttiyksiköllä.

In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.

Visit our pressroom