Norway's financial regulator requires 'too big to fail' tag on eight banks
The financial regulator of Norway had identified eight banks said to be systematically important to the USD500 billion Norwegian economy. It had also said the lenders need to face and comply with the highest capital requirements set forth for the banking industry.
The said banks are DNB Bank, Nordea Bank Norge, SpareBank 1 Nord-Norge, SpareBank 1 SR-Bank, SpareBank 1 SMN, Sparebanken Vest, Sparebanken Pluss and Sparebanken Soer. These banks, according to the Financial Supervisory Authority, should be designated as systematically important financial institutions. It informed the Finance Ministry of such a need through a statement today, even as Sparebanken Soer and Sparebanken Pluss are merging.
These banks identified as 'too big to fail' would be subject to an additional 2% capital requirement of their risk weighted assets. This would raise the total minimum ratio from th4e current 9% to 11% for 2015 and 12% in 2016. Norway is requiring stricter rules above the European average in order to prevent financial imbalances as the level of household debt increases in the Scandinavian region's richest economy.
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