Most Concentrated EU Bank Market Sets Battle Lines on New Buffer
- Finnish bank lobby says more regulation would hurt investment
- Finance ministry is preparing systemic risk buffer legislation
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No other country in the European Union has as much lending concentrated in as few banks as Finland.
To deal with the risk of one lender bringing down the entire economy, the Finnish Finance Ministry wants to add a systemic risk buffer to the regulator’s toolbox. The idea is that the watchdog should be free to apply an extra layer of capital if it sees non-cyclical, long-term risks building up. More specifically, the Financial Supervisory Authority could force banks operating in Finland to hold between 1 percent and 5 percent core capital on top of existing buffers.