Economy and Banking Sector of Norway

Location Northern Europe
Population (2016)5 213 985 ↑ (+0.01%)
EU Status not a member
Economy
National Currency NOK (Norwegian krone)
    Exchange Rate (2017-01-19) 1 EUR = 9.0193 NOK
GDP 
    Nominal GDP (2015)350.9 bln EUR ↓ (-0.07%)
    Nominal GDP per Capita (2015)67 600 EUR ↓ (-0.09%)
    Real GDP Growth (2015)1.6 % ↓ (2014: 2.2 %)
Inflation Rate 
    CPI, MoM (Sep 2016)0.4 % ↑ (Aug 2016: -0.7 %)
    CPI, YoY (Sep 2016)4.1 % ↓ (Aug 2016: 4.5 %)
    CPI, Year Average (2015)2.0 % ↑ (2014: 1.9 %)
Unemployment Rate (2015)4.4 % ↑ (2014: 3.5 %)
Credit Ratings (as of Sep 2016)
    FitchAAA highest credit quality, outlook stable
    Moody'sAaa prime, outlook stable
    S&PAAA prime
Taxation
Withholding Tax 0.0 - 25.0%
Double Taxation Agreements 82 signed agreements
Information Exchange 
    Exchange on Request 44 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 15 April 2013, Model 1
Banking Sector
Financial Market Development 5.2 (max 7.0) rank: 9th out of 138 countries
    Banks' Soundness 6.4 (max 7.0) rank: 7th out of 138 countries
Banking Industry Country Risk 2(1 - lowest risk, 10 - highest risk)
    Economy Risk 2
    Industry Risk 3
Deposit Guarantee Scheme 
    Maximum Protected Amount 2 000 000 NOK
Country Ceiling for Deposits 
    Local Currency (Norwegian krone)Aaa prime
    Foreign CurrencyAaa prime
Banking Sector Structure 
    Number of Banks168
    Recent Changes (2015) new banks: 3, closed banks: 2
Major Banks
 DnB NOR Bank ASA  SpareBank 1 SMN
 Nordea Bank Norge  SpareBank 1 Nord-Norge
 Sparebanken Vest  Sandnes Sparebank
 SpareBank 1 SR-Bank
 List of Banks in Norway

Norwegian Economy

National Currency

During the last 11 years EURNOK exchange rate was within the range 7.2925 - 9.7500, reaching its maximum in Dec 2008 and falling to its minimum in Aug 2012.

Euro to Norwegian krone (EURNOK).
Chart 1. Euro to Norwegian krone (EURNOK). Source: ECB.
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GDP

According to Eurostat, nominal GDP of Norway in 2015 was 350.9 bln EUR.

Norway outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.4% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 1.6% which was equal to 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 Norway.
Chart 2. Real GDP Growth in Norway. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Norway was 67 600 EUR.

Norway 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 69.9% 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  Norway; European Union = 100.
Chart 3. GDP Per Capita at Purchasing Power Parity in Norway; European Union = 100.
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Inflation Rate

According to Eurostat, inflation rate in Norway in 2015 expressed as annual percentages of average consumer prices was 2.0% which was above the Euro Area average (0.0%) and above the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Norway.
Chart 4. Inflation Rate in Norway. Source: Eurostat, International Monetary Fund.
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Taxation in Norway

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Norway are shown in Table 1.

Dividends Interest
Natural person, resident 0.00.0
Natural person, non-resident 25.00.0
Table 1. Withholding tax rates in Norway.
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Double Taxation Agreements

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

Norway 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):

 Albania
 Argentina
 Australia
 Austria
 Azerbaijan
 Bangladesh
 Barbados
 Belgium
 Benin
 Brazil
 Bulgaria
 Canada
 Chile
 China
 Cote D'Ivoire
 Croatia
 Curacao
 Cyprus
 Czech Republic
 Egypt
 Estonia
 France
 Gambia
 Georgia
 Germany
 Greece
 Hungary
 Iceland
 India
 Indonesia
 Ireland
 Israel
 Italy
 Jamaica
 Japan
 Kazakhstan
 Kenya
 Korea, Republic of
 Latvia
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta (Feb 2013)
 Mexico
 Morocco
 Nepal
 Netherlands
 New Zealand
 Pakistan
 Philippines
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation
 Senegal
 Serbia
 Sierra Leone
 Singapore
 Sint Maarten (Dutch part)
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Switzerland
 Tanzania, United Republic of
 Thailand
 Trinidad and Tobago
 Tunisia
 Turkey
 Uganda
 Ukraine
 United Kingdom (Dec 2013)
 United States
 Venezuela
 Vietnam
 Zambia
 Zimbabwe

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

 Bosnia and Herzegovina
 Malawi
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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.

Norway 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
 Bermuda
 British Virgin Islands
 Cayman Islands
 Cook Islands
 Denmark
 Dominica
 Faroe Islands
 Finland
 Gibraltar
 Greenland
 Grenada
 Guernsey
 Isle of Man
 Jersey
 Liberia
 Liechtenstein
 Macau
 Marshall Islands
 Mauritius
 Monaco
 Montserrat
 Panama (Dec 2013)
 Saint Kitts and Nevis
 Saint Lucia
 Saint Vincent and The Grenadines
 Samoa
 San Marino
 Sweden
 Turks and Caicos Islands
 Uruguay (Jan 2014)

There are also several agreements between Norway 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
 Niue (Oct 2013)
 Seychelles
 Vanuatu

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

Norway 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).

Norway has FATCA agreement with the U.S. in effect since 15 April 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in Norway 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: Norwegian financial accounts hold in U.S. financial institutions will be reported to Norwegian authorities.

Further Information:
FATCA and European countries

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Norwegian Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Norway is scored 5.2 out of maximum 7.0 and ranked 9th out of 138 analysed economies. Soundness of banks is scored 6.4 bringing Norway into the 7th place, trustworthiness and confidence of financial market is scored 5.4 (17th place).

Financial Market Development in Norway.
Chart 5. Financial Market Development in Norway. 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.

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

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

Table 2. BICRA for Norway. 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 Norway are summarised in Table 3.

Scheme Participantsall credit institutions operating in Norway, branches of non-EEA banks, branches of Norwegian banks abroad
Scheme Exemptionsbranches of EEA-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountsany credit balance on a named account, and any debt evidenced by a certificate of deposit issued to a named person
Maximum Protected Amount2 000 000 NOK
Paid In CurrencyNOK

Table 3. Deposit guarantee scheme in Norway.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

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 (Norwegian krone) deposit ceiling for Norway is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

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Banking Sector Structure

Currently there are 168 credit institutions operating in Norway.

Recent structural changes (2013 - 2015) of the banking sector of Norway are summarised in Table 4.

201320142015
Number of Opened Banks223
Number of Closed Banks322

Table 4. Recent structural changes in the banking sector of Norway.

All the credit institutions operating in Norway can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks41
Central banks1
Commercial bank22
Savings bank104

Table 5. Number of banks by category in Norway.

The list of the most recently opened banks in Norway is provided in Table 6.

NameStart Date
 MONOBANK ASA (new)November 2015
 SKANDIABANKEN ASA (new)September 2015
 SAFE DEPOSIT BANK OF NORWAY AS (new)July 2015
 GRENKE BANK AG BRANCH NORWAY (new)November 2014
 KOMPLETT BANK ASA (new)March 2014
 OBOS-BANKEN AS (new)June 2013
 COLLECTOR BANK AB, NORGE FILIAL (new)March 2013

Table 6. The most recently opened banks in Norway.

There are 39 branches of foreign banks from 7 different countries in Norway. Table 7 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Sweden26
 United Kingdom4
 Germany3
 Denmark2
 Ireland2
 Netherlands1
 Belgium1

Table 7. Number of branches of foreign banks in Norway grouped by country of origin.

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