Financial Supervisory Authority examines legality of secretive bank
Vahvar Bank founder insists no money has been received
The Finnish Financial Supervisory Authority (FIN-FSA) has started to investigate the legality of insurance activities that are to be set up around the Vahvar joint-stock bank.
Vahvar, which operates in Kauniainen has approached wealthy residents of Helsinki and Espoo with a direct mailing encouraging them to become shareholders and to join an insurance savings scheme.
The marketing brochure gives the impression that the activities of Vahvar are somewhat secretive. Vahvar promises to disclose full details of itself and its investigations to those who sign up as shareholders, and sign a confidentiality agreement.
Timo Peltonen of FIN-FSA confirms that Vahvar’s activities are under investigation by the authority. “One cannot get too deep on the basis of the brochure, and information on the Internet”, Peltonen says.
According to FIN-FSA’s leading advisor Erkki Kotkanen, Vahvar Bank has not applied for permission to engage in deposit banking.
“The word ‘deposit’ may be used only if the account is within the framework of deposit protection”, he points out.
The Vahvar brochure and website repeatedly use the words for “bank” and “savings”. With the help of savings, it is possible to apply for Vahvar savings guarantees, which are an alternative to insurance, the brochure insists.
The impression given by the Vahvar business idea is that it does not exaggerate the risk of damage in the way that insurance companies do. Consequently the savings that occur are to the benefit of the customers. Vahvar therefore aims to be a bank on the one hand, and an insurance company on the other.
Vahvar’s chairman of the board, 80-year-old Kaarlo Hilpas Hirvonen, says that not a single euro has been collected from Finns yet.
“We accept promises to save. We will apply for a licence to engage in banking once we have enough investors”, Hirvonen says.
Becoming an investor in Vahvar requires an input of EUR 25,000. Hirvonen says that the first 400 will be able to join the effort.
Hirvonen says that the company has already been in touch with FIN-FSA, and that things matters appear to be proceeding slowly.
“It is unlikely that much will be achieved before summer”, says Hirvonen, who has previously worked in managing positions at Rank Xerox.
Financial Supervisory Authority