Finnish bank directors: US bank crisis not spreading to Finland
Ten leading figures in Finnish banking do not expect that the full brunt of the banking and finance crisis that has hit the United States will spread to Finland, even though there are some repercussions in the Nordic region.
The top bankers, interviewed by Helsingin Sanomat on Monday say that the main impact on the everyday lives of Finns will be in the form of less borrowing, and a decreased spending by holders of stock.
Market interest has been on the increase since mid-February, and prices of shares have come down.
On Monday, the OMXH index on the Helsinki Stock Exchange declined by more than 3.5 per cent, which is in line with the downward trend which began in November.
Pohjola Bank deputy CEO Timo Ritakallio says that there is no risk of total confusion in the Finnish financial sector.
"When acquisition of finance is more expensive around the world it is more expensive for Finns as well. This affects interest rates on loans, and on the willingness to borrow money", Ritakallio says.
A greater impact in his view is that a strong decline in share prices could be reflected in consumer behaviour of institutions and individuals.
"From the US perspective, the banking and finance crisis is real. The declines in interest rates by the US Federal Reserve will settle things down for a while, but to really calm the situation, at least half a year of good news will be needed", he says.
Markku Pohjola, deputy CEO of the Nordea Group, says that there are no signs of even a European banking crisis. "In Finland the threat of a credit risk is exceptionally low", Pohjola points out.
Those who invest in Nordea's mutual funds are suffering, because the wavering Bear Stearns is the biggest single part of the portfolio of Nordea's North America Value fund. On Monday, the fund lost 2.6 per cent from Friday's quotation.
Sampo Bank CEO Ilkka Hallavo sees the selloff of Bear Stearns as "more of an individual event than a phenomenon". He sees no need to make any changes to economic forecasts.
Jari Järvinen, head economist of the Tapiola Group, and Stefan Törnqvist, director of asset management at Ålandsbanken are more critical.
Järvinen feels that "the risk of a widespread banking crisis spreading to Europe has grown significantly".
He feels that the danger of the spread of the crisis is very real, and actually quite likely. "In the next phase the Federal Reserve might have to buy problem credits directly from the banks into its own balance sheet", Järvinen says.
Törnqvist sees the banking crisis as global. However, he feels that "Finnish banks seem to have matters well under control".