Finnish banks' resiliency is higher than European average -Finnish FSA (updated)
17/03/2020 08:51
(Adds details)
HELSINKI, March 17 (Reuters) - Finnish banks' capacity to
withstand losses caused by sudden and severe disruptions in
their operating environment is higher than the European average,
the country's financial supervisory authority said on Tuesday.
But the sharp weakening of economic activity caused by the
coronavirus epidemic will impact the liquidity of banks'
business and private customers "and thereby increase credit
losses," it said in a statement.
Finland's government will pass emergency legislation in
parliament on Tuesday to close all schools and universities from
Wednesday among other measures in response to the spread of the
coronavirus. urn:newsml:reuters.com:*:nL8N2B97FK
Finland's gross domestic product will fall between 1% and 5%
this year due to the coronavirus, economic research institute
ETLA said.
The latest government forecast, from December, was for 1%
growth. Last week, Danske Bank cut its forecast to 0.3% citing
the hit from coronavirus.
The ETLA said it estimated that its most negative scenario
was the most likely outcome.
"In that case Finnish GDP would shrink this year 5 percent.
The economy would shrink in the second quarter by close to a
tenth, but would start to recover after that," ETLA said on
Tuesday.
The financial watchdog said the Finnish banks' own liquidity
situation was currently good but warned employee pension
institutions' average solvency threatened to decline rapidly and
significantly.
"The coronavirus and the market changes caused by it have
significantly weakened the value of equity investments and
credit risk-bearing fixed income investments," it said.
(Reporting by Anne Kauranen and Tarmo Virki; editing by John
Stonestreet, Kirsten Donovan)
((anne.kauranen@thomsonreuters.com; +358925166112;))