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Economy and Banking Sector of Finland

Finland
Location
Northern Europe
Population  (2017)
5 503 297  (0.00%)
EU Status
member since 1995
Currency
EUR (Euro)
Nominal GDP (2016)
214.1 bln EUR  (+0.03%)
Credit Ratings (as of Sep 2016)
AA+/Aa1
Consolidated Banking Assets (2016)
537.38 bln EUR  (-1.81%)
Deposit Guarantee
100 000 EUR
Number of Banks
273

Finland is a prosperous, democratic country in Northern Europe with a high standard of living, a low level of corruption, and a high level of education and health care.

Finland has a modern highly industrialized market economy with competitive manufacturing, engineering, telecommunications, and electronics industries.

Finnish banks and financial markets avoided severe consequences of global financial crisis 2008-2009. Finnish banking landscape is rather diversified and consists of both systemic universal banks operating throughout the country and internationally, and specialized regional savings and cooperative banks. The majority of foreign-controlled banks operating in Finland are originated from Sweden.

List of Banks in Finland

National Currency

Euro (EUR)

Finland joined the Euro Area on 1 January 1999.

GDP

Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
214.1 bln EUR  (+0.03%)39 000 EUR  (+0.03%)1.4 %  (2015: 0.5 %)

According to Eurostat, nominal GDP of Finland in 2016 was 214.1 bln EUR.

Finland underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.4% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 1.4% which was below the Euro Area average (1.8%) and below the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

Real GDP Growth in Finland.

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

In 2016, nominal GDP per capita in Finland was 39 000 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 7.6% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 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.

Inflation Rate

CPI, MoM (Sep 2017)CPI, YoY (Sep 2017)CPI, Year Average (2016)
0.2 % (unchanged)0.8 % (unchanged)0.4 %  (2015: -0.2 %)

According to Eurostat, inflation rate in Finland in 2016 expressed as annual percentages of average consumer prices was 0.4% which was above the Euro Area average (0.2%) and above the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

Inflation Rate in Finland.

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

Unemployment Rate

Unemployment Rate (2016)
8.8 %  (2015: 9.4 %)

Government Bond Yield

Government Bond Yield (Sep 2017)
0.58 %  (Aug 2017: 0.65 %)
According to Eurostat, government bond yield in Finland in Sep 2017 was 0.58%, compared to 0.65% in Aug 2017.
Government bond yield of Finland.

Chart 4. Government bond yield of Finland. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
AA+ (very high credit quality), outlook stable Aa1 (high grade), outlook stable

Double Taxation Agreements

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

DTAs of Finland: 70 Signed Agreements

Finland signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 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

Information Exchange

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

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

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

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

Exchange on Request: 48 Signed Agreements

Finland signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 1 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 1 January 2013 of signing the agreement is given in brackets):

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

Automatic Exchange: Starts in September 2017

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

Automatic Excnange: 57 Bilateral Agreements to Receive Information

Finland has signed bilateral agreements with 57 jurisdictions to automatically receive information:

 Andorra
 Argentina
 Australia
 Austria
 Belgium
 Bonaire, Saint Eustatius and Saba
 Bulgaria
 Canada
 China
 Colombia
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Estonia
 Faroe Islands
 France
 Germany
 Gibraltar
 Greece
 Greenland
 Guernsey
 Hungary
 Iceland
 India
 Ireland
 Isle of Man
 Italy
 Japan
 Jersey
 Korea, Republic of
 Latvia
 Liechtenstein
 Lithuania
 Luxembourg
 Malaysia
 Malta
 Mauritius
 Mexico
 Monaco
 Netherlands
 New Zealand
 Norway
 Poland
 Portugal
 Romania
 San Marino
 Seychelles
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 United Kingdom
 Uruguay

Automatic Excnange: 69 Bilateral Agreements to Send Information

Finland has signed bilateral agreements with 69 jurisdictions to automatically send information:

 Andorra
 Anguilla
 Argentina
 Australia
 Austria
 Belgium
 Belize
 Bermuda
 Bonaire, Saint Eustatius and Saba
 British Virgin Islands
 Bulgaria
 Canada
 Cayman Islands
 China
 Colombia
 Costa Rica
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Estonia
 Faroe Islands
 France
 Germany
 Gibraltar
 Greece
 Greenland
 Guernsey
 Hungary
 Iceland
 India
 Indonesia
 Ireland
 Isle of Man
 Italy
 Japan
 Jersey
 Korea, Republic of
 Latvia
 Liechtenstein
 Lithuania
 Luxembourg
 Malaysia
 Malta
 Mauritius
 Mexico
 Monaco
 Montserrat
 Netherlands
 New Zealand
 Norway
 Poland
 Portugal
 Romania
 Saint Lucia
 Saint Vincent and The Grenadines
 Samoa
 San Marino
 Seychelles
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 Turks and Caicos Islands
 United Kingdom
 Uruguay

Further Information

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).

FATCA Status in Finland
IGA in effect since 05 March 2014, Model 1

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

Financial Market Development

Financial Market Development
5.5 (max 7.0), 4th out of 138 countries
Banks' Soundness
6.6 (max 7.0), 1st out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Finland is scored 5.5 out of maximum 7.0 and ranked 4th out of 138 analysed economies, trustworthiness and confidence of financial market is scored 5.8 (7th place).

Financial Market Development in Finland.

Chart 5. Financial Market Development in Finland. Source: WEF.


Soundness of banks is scored 6.6 bringing Finland into the 1st place.

Soundness of Banks in Finland.

Chart 6. Soundness of Banks in Finland. Source: WEF.

Further Information

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

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 1.

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 1. Deposit guarantee scheme in Finland.

Further Information

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) Foreign Currency
Aaa (prime) Aaa (prime)

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

Deposit Rates

Average Deposit Rate (Aug 2017, EUR)
0.34 %  (Jul 2017: 0.39 %)
In Aug 2017, 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 0.34% which was below the Euro Area average (0.36%).
Deposit Rates in Finland.

Chart 7. Deposit Rates in Finland. Source: ECB.

Banking Sector Structure

Number of Banks
273
Consolidated Assets (2016)
537.38 bln EUR  (-1.81%)
Recent Changes (2016)
new banks: 3, closed banks: 5

Currently there are 273 credit institutions operating in Finland.

In 2016 consolidated banking assets in Finland were 537.38 bln EUR. The consolidated banking assets' evolution is shown at Chart 8 below.

Consolidated banking assets in Finland.

Chart 8. Consolidated banking assets in Finland.

Recent structural changes (2013 - 2016) of the banking sector of Finland are summarised in Table 2.

2013201420152016
Number of Opened Banks1333
Number of Closed Banks615145

Table 2. Recent structural changes in the banking sector of Finland.

The list of the most recently opened banks in Finland is provided in Table 3.

NameStart Date
 GCC Capital AB , filial i Finland (new)November 2016
 Nordea Hypoteksbank Abp (new)October 2016
 Eurocard AB, filial i Finland (new)September 2016
 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 3. The most recently opened banks in 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
Branches of foreign banks34
Central banks1
Cooperative banks199
Savings banks25

Table 4. Number of banks by category in Finland.

There are 34 branches of foreign banks from 8 different countries in Finland. Table 5 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Sweden24
 Norway2
 Denmark2
 United Kingdom2
 Estonia1
 France1
 Belgium1
 Ireland1

Table 5. Number of branches of foreign banks in Finland grouped by country of origin.