Norway's banks should pay more into emergency funds, government says (updated)

Morrow Bank ASA

21/06/2017 13:58

* Proposes new rules for how to handle future banking crisis 
    * Calls for "somewhat" higher contribution to emergency 
funds 
    * Banking lobby had asked for cap on payments 
    * Payments could rise by NOK 300 mln-400 mln/year -lobby 
 
 (Adds quotes, background, share price) 
    OSLO, June 21 (Reuters) - Norwegian banks should pay more 
into two emergency funds that guarantee deposits and help to pay 
for bank restructurings in a crisis, the government said on 
Wednesday. 
    The proposals are part of new legislation the government is 
putting forward to deal with any future banking crisis. 
    "These contribution requirements are somewhat higher than 
the current contribution level, but on par with contributions 
paid in 2010, relative to the size of the banking sector," the 
Finance Ministry said in a statement. 
    "In accordance with the directives, the Ministry also 
proposes that the contributions shall be adjusted in proportion 
to the risk profile of each institution," it said. 
    Banking lobby Finance Norway criticised the proposal, 
estimating it would increase payments by 300 million-400 million 
Norwegian crowns ($35.15 million-$46.87 million), and arguing 
instead that payments should be capped at current levels. 
    The new legislation also includes a so-called bail-in 
mechanism, allowing regulators to convert debt to equity to help 
prevent a bank from defaulting on its obligations. 
    Shares in Norway's biggest bank DNB  DNB.OL  were 2.3 
percent lower at 1238 GMT, underperforming a 0.7 percent fall in 
European banking shares  .SX7P . 
    Government statement in English: http://bit.ly/2tsI8So 
 
($1 = 8.5337 Norwegian crowns) 
 
 (Reporting by Terje Solsvik. Editing by Ole Petter Skonnord and 
Jane Merriman) 
 ((terje.solsvik@thomsonreuters.com; +47 918 666 70; Reuters 
Messaging: terje.solsvik.thomsonreuters.com@reuters.net)) 
 
Keywords: NORWAY BANKS/