HELSINKI, April 4 Finnish banks have remained in
reasonably good health but they could face significant risks
from a weak economy, the country's financial watchdog said.
The Nordic country is struggling to recover from a two-year
recession, and its Finance Ministry this week cut its forecast
for the economy's growth this year to 0.5 percent, citing weak
Finland's Financial Supervisory Authority (FIN-FSA), in its
biannual report published on Friday, warned that banks in the
country must carefully monitor their customers' financial
position amid the prolonged economic uncertainty.
But it said the capital position of the banking and
insurance sectors was reasonably good overall. The sectors'
profitability has also remained fairly good despite the weak
performance of the real economy.
"The outlook for the Finnish economy is uncertain, which
increases the financial sector's susceptibility to negative
changes. Maintaining adequate capital buffers is therefore
crucial to financial market stability and confidence," said
Director General Anneli Tuominen in a statement.
FIN-FSA said the Finnish banks' capital adequacy stood
strong at 16 percent last year, while the Core Tier 1 capital
ratio was 14.8 percent. The country's top lenders are
co-operative OP-Pohjola as well as subsidiaries of Nordea
and Danske Bank.
The watchdog also said Finnish pension funds had a strong
risk-bearing capacity while insurers in the country showed good
(Reporting by Jussi Rosendahl; Editing by Alison Williams)