OP: Bank regulation could double loan margins

OP-Pohjola Group changing organisation

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Reijo Karhinen, director-general of the OP-Pohjola Group, says that if plans for new regulation requirements for banks in the European Union are implemented, it could impose costs of hundreds of euros on the Finnish banking sector.
      Karhinen is most concerned about the prospect of tighter liquidity requirements for banks.
      “If banks are required a minimum liquidity of four per cent, for instance, it means that the margins on housing loans would have to be doubled. Customers would be the ones to pay”, he notes.
     
Nearly 20 different regulation requirements for banks have been proposed for the euro zone. Karhinen emphasises that most of the demands can be implemented, but that the impact must be carefully considered.
      However, he does not reject the idea of a tax on banks.
      “We can live with a bank tax”, Karhinen said on Monday.
     
Karhinen put forward OP-Pohjola’s own proposals for improving bank supervision. He says that the current parent company, the OP-Pohjola Group Central Cooperative.
      It is to be replaced by a new service company separate from the central institution, and will be responsible for the development and provision of centralised services for OP-Pohjola Group and its member cooperative banks as of the beginning of next year.
      “The new parent company will simply seek to monitor and guide the company’s activities. We want clarity in the organisation. At the moment the OP-Pohjola Group Central Cooperative has monitored itself, but the new service company will also be under the direction of the parent company”, Karhinen said on Monday.


Links:
  Press release 14.6.2010: Changes in OP-Pohjola Group Central Cooperative´s organisation and senior management

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