HELSINKI, June 27 (Reuters) - Finland’s Financial Supervisory Authority (FSA) on Tuesday confirmed it will attribute higher risk weightings next year to housing loans when calculating banks’ capital adequacy ratios due to growing household debt.
Household debt relative to disposable income has almost doubled in Finland since 2000 to around 125 percent, and the European Systemic Risk Board warned Finland about the high level of household indebtedness in November.
The watchdog announced in March its plan to raise the minimum risk weight to 15 percent of banks’ own funds on their balance sheet, up from the current 10 percent, by January 2018.
“Higher risk weights are aimed at strengthening the resilience of the financial system. Although growth in indebtedness has faded, household indebtedness is still at a high level”, Olli Rehn, chairman of the FSA board, said in a statement.
Finland’s biggest banks include OP Financial Group, Sweden-based Nordea and Denmark’s Danske Bank . (Reporting by Tuomas Forsell; Editing by Hugh Lawson)