There are more than 200 banks operating in Finland. These included domestic deposit banks, investment banks, and branches and subsidiaries of foreign credit institutions.
The most important piece of legislation that governs banking in Finland is the Act on Credit Institutions. Compliance with the laws and regulations is overseen by the Financial Supervisory Authority and the ECB. They also monitor that banks meet Finnish capital adequacy requirements.
All authorized deposit-taking banks are members of the Deposit Guarantee Fund. If an individual bank becomes insolvent, the Fund will compensate its customers’ insured deposits to a maximum of €100,000 per depositor.
The forming of financial groups has been a prevalent phenomenon in the banking sector in recent years. Foreign ownership in the sector is large.
A financial group is formed by one deposit bank and one or several other businesses that operate in the financial sector, such as fund management companies, finance houses, life or non-life insurers.
Recently, a large number of new international and EU-level regulations has been created, many of which are a consequence of the recent financial crisis. In addition, more regulations are currently under way. The effects of the regulatory reforms must be thoroughly analysed, as they will have impact on the whole sector, bank customers included.
FFI has drawn up a set of principles for Good Banking Practice to establish a common code of conduct in the banking sector.
Finance houses provide vital financing for investments
The dozens of finance houses operating in Finland include credit institutions, branches of foreign credit institutions, and companies that are members of multinational corporate groups (e.g. car importers). FFI’s member finance houses belong to various banking groups. They are either authorised credit institutions, or otherwise subject to the Finnish Financial Supervisory Authority through their banking group.
The most important piece of legislation applied to the operations of FFI member finance houses is the Act on Credit Institutions. The financial crisis has also given rise to increase in regulation, which will be one of the sector’s main challenges in the near future.