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Finland looking to set systemic risk buffers for banks

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Finland looking to set systemic risk buffers for banks

Finland's finance ministry proposed to introduce a systemic risk buffer for banks and investment firms in the country to promote financial stability.

Finance Minister Petteri Orpo said that while Finnish lenders were in good shape and had conducted their businesses responsibly, it was up to the government to ensure that sufficient stability tools were available, if needed.

A buffer would allow Finland's financial regulator to demand banks to set aside 1% to 5% of core capital, partly on top of existing buffers, a legislation which has already been approved by most countries in the European Union, Reuters reported.

Meanwhile, a government source told the newswire that Nordea's decision to relocate its headquarters to Finland from Sweden was not the reason behind the additional capital requirement plans, and that they had been prepared to introduce the buffer requirement for some time before the Nordea announcement.

A potential bill on the buffer could be proposed to the Finnish parliament in the coming weeks, with the government looking to approve it by January 2018, according to Reuters.