Economy and Banking Sector of Finland

Location Northern Europe
Population (2016)5 487 308 ↑ (0.00%)
EU Status member since 1995
Economy
National Currency EUR (Euro) since 1 January 1999
GDP 
    Nominal GDP (2015)207.2 bln EUR ↑ (+0.01%)
    Nominal GDP per Capita (2015)37 800 EUR ↑ (+0.01%)
    Real GDP Growth (2015)0.5 % ↑ (2014: -0.1 %)
Inflation Rate 
    CPI, MoM (Sep 2016)0.2 % ↑ (Aug 2016: 0.0 %)
    CPI, YoY (Sep 2016)0.5 % no change(unchanged)
    CPI, Year Average (2015)-0.2 % ↓ (2014: 1.2 %)
Unemployment Rate (2015)9.4 % ↑ (2014: 8.7 %)
Government Bond Yield (Sep 2016)0.08 % ↑ (Aug 2016: 0.06 %)
Credit Ratings (as of Sep 2016)
    FitchAA+ very high credit quality, outlook stable
    Moody'sAa1 high grade, outlook stable
    S&PAA+ high grade
Taxation
Double Taxation Agreements 70 signed agreements
Information Exchange 
    Exchange on Request 48 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 05 March 2014, Model 1
Banking Sector
Financial Market Development 5.5 (max 7.0) rank: 5th out of 138 countries
    Banks' Soundness 6.6 (max 7.0) rank: 1st out of 138 countries
Banking Industry Country Risk 2(1 - lowest risk, 10 - highest risk)
    Economy Risk 1
    Industry Risk 3
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Aaa prime
    Foreign CurrencyAaa prime
Deposit Rates (Aug 2016, EUR)0.48 % ↑ (Jul 2016: 0.42 %)
Banking Sector Structure 
    Number of Banks285
    Recent Changes (2015) new banks: 3, closed banks: 14
    Consolidated Assets (2015) 547.31 bln EUR ↓ (-4.48%)
Major Banks
 Pohjola Bank Plc  Nordea Bank Finland Plc
 Aktia Bank Plc  Danske Bank Plc
 List of Banks in Finland

Finnish Economy

National Currency

Finland joined the Euro Area on 1 January 1999.

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GDP

According to Eurostat, nominal GDP of Finland in 2015 was 207.2 bln EUR.

Finland underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.7% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 0.5% which was below the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Finland.
Chart 1. Real GDP Growth in Finland. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Finland was 37 800 EUR.

Finland has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 7.1% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Finland; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in Finland; European Union = 100.
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Inflation Rate

According to Eurostat, inflation rate in Finland in 2015 expressed as annual percentages of average consumer prices was -0.2% which was below the Euro Area average (0.0%) and below the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Finland.
Chart 3. Inflation Rate in Finland. Source: Eurostat, International Monetary Fund.
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Taxation in Finland

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Finland signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina
 Armenia
 Australia
 Austria
 Azerbaijan
 Barbados
 Belarus
 Belgium
 Bosnia and Herzegovina
 Brazil
 Bulgaria
 Canada
 China
 Croatia
 Cyprus (Apr 2013)
 Czech Republic
 Egypt
 Estonia
 France
 Georgia
 Germany
 Greece
 Hungary
 India
 Indonesia
 Ireland
 Israel
 Italy
 Japan
 Kazakhstan
 Korea, Republic of
 Kyrgyzstan
 Latvia
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mexico
 Moldova, Republic of
 Montenegro
 Morocco
 Netherlands
 New Zealand
 Pakistan
 Philippines
 Poland
 Portugal
 Romania
 Russian Federation
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Switzerland
 Tajikistan (Sep 2013)
 Tanzania, United Republic of
 Thailand
 Turkey
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uruguay (Feb 2013)
 Uzbekistan
 Vietnam
 Zambia
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Finland signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Andorra
 Anguilla
 Antigua and Barbuda
 Aruba
 Bahamas
 Bahrain
 Belize (Sep 2013)
 Bermuda
 British Virgin Islands
 Cayman Islands
 Cook Islands
 Curacao
 Denmark
 Dominica (Mar 2013)
 Faroe Islands
 Gibraltar
 Greenland
 Grenada
 Guernsey
 Iceland
 Isle of Man
 Jersey
 Liberia
 Liechtenstein
 Macau
 Marshall Islands
 Mauritius
 Monaco
 Montserrat
 Niue (Feb 2014)
 Norway
 Panama (Dec 2013)
 Saint Kitts and Nevis
 Saint Lucia
 Saint Vincent and The Grenadines
 Samoa
 San Marino
 Seychelles
 Sint Maarten (Dutch part)
 Sweden
 Turks and Caicos Islands
 Vanuatu

There are also several agreements between Finland and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Botswana (Feb 2013)
 Brunei Darussalam
 Costa Rica
 Guatemala
 Jamaica
 Qatar (Sep 2013)

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Finland signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Finland has FATCA agreement with the U.S. in effect since 05 March 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Finland are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Finnish financial accounts hold in U.S. financial institutions will be reported to Finnish authorities.

Further Information:
FATCA and European countries

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Finnish Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Finland is scored 5.5 out of maximum 7.0 and ranked 5th out of 138 analysed economies. Soundness of banks is scored 6.6 bringing Finland into the 1st place, trustworthiness and confidence of financial market is scored 5.8 (8th place).

Financial Market Development in Finland.
Chart 4. Financial Market Development in Finland. Source: WEF.
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Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Finland is included into group '2' with economic risk scored '1' and industry risk scored '3'.

BICRA Group 2
Economic risk 1
    Economic resilience very low
     Economic imbalances low
    Credit risk in economy very low
Industry risk 3
    Institutional framework low
    Competitive dynamics low
    Systemwide funding intermediate
Government support assessment supportive

Table 1. BICRA for Finland. Source: S&P's.

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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Finland are summarised in Table 2.

Scheme Participantsall credit institutions operating in Finland, branches of Finnish banks abroad
Scheme Exemptionsbranches of foreign banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 2. Deposit guarantee scheme in Finland.

Further Information:
Deposit Guarantee Schemes in Europe

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for Finland is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

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Deposit Rates

In Aug 2016, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.48% which was below the Euro Area average (0.53%).

Deposit Rates in Finland.
Chart 5. Deposit Rates in Finland. Source: ECB.

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Banking Sector Structure

Currently there are 285 credit institutions operating in Finland.

Recent structural changes (2013 - 2015) of the banking sector of Finland are summarised in Table 3.

201320142015
Number of Opened Banks133
Number of Closed Banks61514

Table 3. Recent structural changes in the banking sector of Finland.

All the credit institutions operating in Finland can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Banks14
Banks1
Branches of foreign banks34
Central banks1
Cooperative banks210
Savings banks25

Table 4. Number of banks by category in Finland.

The list of the most recently opened banks in Finland is provided in Table 5.

NameStart Date
 Citibank Europe plc, sivuliike Suomessa (new)November 2015
 Collector Bank AB, filial i Finland (new)July 2015
 Nordea Bank AB (publ), Suomen sivuliike (new)June 2015
 BNP Paribas Fortis SA/NV, sivuliike Suomessa (new)August 2014
 Svea Ekonomi AB, Filial i Finland (new)July 2014
 TF Bank AB, filial Finland (new)March 2014
 Avida Finans AB, sivuliike Suomessa (new)October 2013

Table 5. The most recently opened banks in Finland.

There are 34 branches of foreign banks from 9 different countries in Finland. Table 6 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Sweden23
 Norway2
 Denmark2
 United Kingdom2
 Belgium1
 Ireland1
 Germany1
 Estonia1
 France1

Table 6. Number of branches of foreign banks in Finland grouped by country of origin.

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