March 17, 2020 / 2:26 PM / 12 days ago

Finland lowers bank buffers in coronavirus response, prepares to close borders

HELSINKI (Reuters) - Finland decided late on Tuesday to lower buffer requirements of its banks, attempting to boost the slowing economy, as the country prepared to close its borders as part of the response to slow the spread of the coronavirus.

Finland's Foreign Minister Pekka Haavisto, Interior Minister Maria Ohisalo, Prime Minister Sanna Marin and Minister of Transport and Communications Timo Harakka attend the news conference on coronavirus disease (COVID-19), in Helsinki, Finland March 17, 2020. Lehtikuva/Mikko Stig via REUTERS

Finland will start restricting traffic over its borders on Thursday, Interior Minister Maria Ohisalo said.

“Goods and cargo transports will continue across all borders. Indispensable work-related traveling will still be possible and continues within EU borders,” Ohisalo told a news conference.

Permanent residents would be allowed to return and foreign travelers permitted to leave Finland, Ohisalo said.

Traveling abroad should be avoided and the restrictions were valid until April 13, the government said, with passenger railway traffic between Finland and neighboring Russia ending on Wednesday.

Ferry firms Viking Line and Tallink, which link Finland to Sweden and Estonia, both said they would stop operating Helsinki-Stockholm ferries and cut back on the Helsinki-Tallinn route, which was used last year by 8.8 million people.

Finland’s health authority had confirmed 319 coronavirus cases but no deaths by Tuesday, but it said the total number was not reflective of actual cases as testing has been limited to certain groups only since last week.

The financial supervisory authority (FSA) said its decision to lower buffer demands would increase banks lending capacity by 52 billion euros ($57.2 billion).

The FSA said it would closely monitor that banks are targeting relief measures to mitigate the effects of the economic crisis and not on bonuses or dividends.

“In the current very exceptional circumstances, it is justified to reduce the buffers in order not to weaken the ability of credit institutions to lend, especially to the corporate sector,” FSA said.

Earlier on Tuesday economic research institute ETLA said Finland’s gross domestic product will fall between 1% and 5% this year because of the impacts of the coronavirus pandemic, with the most negative scenario as the most likely outcome.

($1 = 0.9087 euros)

Reporting by Anne Kauranen and Tarmo Virki; Editing by Jon Boyle and Grant McCool

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