Finnish banks have strong capital adequacy and resilience to risks

Three major Finnish banks that took part in the European Union stress exercise test for the banking sector, achieved good results. The Finnish participants included OP-Pohjola group, Nordea bank group and Sampo Bank. Nordea and Sampo were included in the exercise as part of their parent groups.

OP-Pohjola group’s capital adequacy is highly resilient to the adverse test scenario employed. Under the assumed adverse scenario, the Tier 1 capital ratio of the group would decline to 12.3 percent by the end of 2011, as compared with the 6 percent minimum target ratio of the testing exercise and the statutory minimum ratio of 4 percent. This estimate also accounts for the risks related to government bonds, which were tested separately.

Nordea Bank and Danske Bank groups were assessed as one body, and also their capital adequacy proved to be strong according to the test. The stress tests arrived at a Tier 1 capital ratio of 10.1 percent for Nordea and 10.0 percent for Danske Bank.

In Finland the calculations and tests were conducted by the Finnish Financial Supervisory Authority FIN-FSA. The Finnish banks’ capital adequacy and resilience to risks were considered strong, which means that no special measures are necessary for ensuring the stability of the banking sector in Finland.

– The EU stress test exercise confirms the findings of the FIN-FSA's previous analyses of the Finnish banking sector's strong resilience to risks in the operating environment, says Jukka Vesala, Deputy Director General.

The Committee of European Banking Supervisors (CEBS), in cooperation with the European Central Bank, was responsible for coordination and harmonisation of the exercise. FIN-FSA and Bank of Finland were actively involved in the preparations for the test in various European forums. The same key assumptions and, in as far as possible, uniform methodology were used for the stress tests across EU countries.

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