Large structural risks require banks to hold buffers for a rainy day
Laakkonen, Helinä; Nyholm, Juho; Kiviniemi, Arttu; Kauko, Karlo (13.05.2022)
Volyymi
96Numero
1/2022Julkaisija
Bank of Finland
2022
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-202205271246Tiivistelmä
The Finnish banking sector’s key vulnerabilities are structural and linked to the Nordic housing market. The result of the Bank of Finland’s and Financial Supervisory Authority’s (FIN-FSA) joint stress testing exercise indicate that the Finnish banking sector is resilient enough to withstand a severe economic and financial crisis on the Nordic housing market. In the stress test, the Common Equity Tier 1 (CET1) capital ratio for the banking sector weakens by 1.4–4.7 percentage points, but still remains above minimum capital requirements. The major losses incurred by the banks would stem from an increase in credit risks, whereas market risks have a clearly minor importance for banks’ capital adequacy.
Julkaisuhuomautus
The accessible version https://www.bofbulletin.fi/en/2022/1/large-structural-risks-require-banks-to-hold-buffers-for-a-rainy-day/