The move of Nordea domicile changed the authorities’ responsibilities for resolution and deposit guarantee
Nordea group has today, 1 October 2018, executed the move of its parent company’s domicile from Sweden to Finland. As a result of the move, the Single Resolution Board, which operates in Brussels, will now be responsible for Nordea’s resolution planning and execution. Experts from the Financial Stability Authority will be closely involved in the SRB led work. The resolution authorities from the Nordic countries will also in the future participate in the work and decision making as members in the resolution college.
The aim of resolution planning is to prepare to deal with severe economic disturbances and thus ensure that a possible crisis situation is managed in a way that protects tax payers and ensures financial stability as well as the continuation of functions critical to the society. As part of the resolution planning a minimum requirement for own funds and liabilities (MREL-requirement), which ensures loss absorption capacity and enables recapitalisation, is determined for the banks. In addition, it is assessed whether there are possible obstacles to the execution of resolution measures and what actions need to be requested from the bank in order to remove substantive impediments.
From this day on, the new parent company Nordea Bank Abp is, like all other banks headquartered in the euro area, obliged to contribute to the Single Resolution Fund (SRF) with annual stability fees. Between 2015-2018, 24.9 billion euros have been collected to the SRF. The financial means can be used to fund resolution measures in a euro area bank provided that strict conditions are met.
As a result of the change of domicile, Nordea Bank Abp and its depositors belong to the Finnish deposit guarantee scheme from now on. The maximum amount guaranteed remains the same after the move, but it is determined in euros in Finland (100 000 EUR) and in crowns in Sweden (950 000 SEK). There are no significant differences in the coverage of the deposit guarantee between Finland and Sweden.
Nordea will contribute to the deposit guarantee fund administered by the Financial Stability Authority with annual deposit guarantee fees. The amount of covered deposits within the Finnish deposit guarantee scheme grows from the current around 51 billion euros to around 127 billion euros as Nordea joins it. According to legislation, 0.8 % of covered deposits, i.e. around one billion euros, is to be collected to the Finnish fund by 2024.