HELSINKI May 10 Household debt growth and
restructuring moves by banks have increased risks for Finland's
financial sector though a crisis remains unlikely, the Bank of
Finland said on Wednesday.
Household debt as a proportion of disposable income rose to
a record high 127 percent last year, according to Statistics
"The near-term likelihood of serious disruptions relating to
business and credit cycles is small. Even so, the financial
system is structurally more vulnerable," the central bank said
in a report.
It cited recent plans by Sweden's Nordea and
Denmark's Danske Bank to convert their Finnish
subsidiaries into branches.
"Such changes may have an impact on the spillover of
stability risks and the availability of finance in Finland. With
a strengthening of banks' Nordic linkages, disruptions in the
financial system may spread more easily from one country to
another," said central bank board member Marja Nykanen.
The bank has previously asked the European Union to tighten
supervision of banks turning their euro zone subsidiaries into
branches that are regulated outside the bloc. Sweden and Denmark
are outside the euro zone.
The Bank of Finland said Finnish banks' capital adequacy
rates were currently in order, though the prospect of serious
disruptions emerging in the future could not be ruled out.
(Reporting by Jussi Rosendahl; editing by John Stonestreet)