“Finnish banks need to considerably build up their liquid funds and increase the share of long-term funding,” the Helsinki-based regulator said in a report today, citing impact assessments. Finnish banks comply with minimum solvency standards and have the required core capital, the FSA said.
Basel III global regulations aim to improve banks’ quality of capital by 2015 and ensure lenders hold adequate buffers to counter losses. Banks must also make sure they don’t rely solely on short-term capital. Some details of the banking regulations remain open, the FSA said.
Finnish banks’ core Tier 1 capital was 13.9 percent, on average, at the end of June and the country’s financial industry remained “solvent and operational,” the regulator said. Low interest rates are weighing on the profitability of banks, with the smallest lenders particularly affected, the agency said. Slowing economic growth may increase loan losses in Finland, it said.
Europe’s debt crisis is still the main risk to the region’s financial industry, which remains “very vulnerable,” the regulator said.
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