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Banking Regulation in Finland

Acquisitions and Mergers

In Finland, credit institutions can acquire stakes in other financial institutions, but there are certain regulations that must be followed.

• Prior Approval Required: Majority holdings require prior approval from the Finnish Financial Supervisory Authority (FFSA).
• Restrictions on Acquisitions: Acquisitions may be subject to restrictions if they compromise the credit institution’s financial position or regulatory supervision.

Liquidation and Resolution

When a credit institution is in trouble, liquidation proceedings can be initiated. There are two main types of liquidation:

• Voluntary Winding-up: This involves the realization of assets and repayment of debts.
• Bankruptcy: A district court orders the institution into bankruptcy.

Important Note: A deposit bank cannot be declared bankrupt or ordered into liquidation while its operations are suspended.

Recovery and Resolution Regime

In case a troubled deposit bank is at risk of default, the Finnish authorities have implemented a recovery and resolution regime to mitigate the impact on the financial system.

• Interruption of Operations: The Recovery and Resolution Act allows for the interruption of a troubled deposit bank’s operations.
• Plan for Reorganization or Termination: The bank must draw up a plan to reorganize its financial position or terminate operations. If it fails to do so, the FFSA will make a proposal to the Finnish authorities.
• Resolution by FSA: A credit institution can be placed under resolution by the FSA if certain criteria are met, including a significant risk of default.