Municipality Finance Plc
Stock exchange release
7 April 2020 at 9:00 am (EET)
FIN-FSA removes the systemic risk buffer requirement set on Municipality Finance; other capital requirements remain unchanged
On 6 April 2020, the Finnish Financial Supervisory Authority (FIN-FSA) has decided to remove the systemic risk buffer requirement set on Municipality Finance (MuniFin). The buffer covered by common equity tier 1 capital (CET1) was previously 1.5%. The FIN-FSA did not change other capital requirements set on MuniFin. The change lowers MuniFin’s capital requirement by 1.0 percentage point, since the systemic risk buffer and MuniFin’s 0.5 percentage point O-SII buffer requirement are overlapping capital requirements. After the change, MuniFin’s minimum capital requirement including the Pillar II requirement set by supervisor is 10.5% for CET1 capital adequacy and 14.0% for the tier 1 and overall capital adequacy.
In general, MuniFin sees the easing of the systemic risk buffer requirements an appropriate reaction from the banking authorities to the effects of the corona pandemic. At the end of 2019, MuniFin’s CET1 capital adequacy was 83.1% and the tier 1 and overall capital adequacy were 107.9%. The company has clearly met all capital requirements previously set on it. In its capital and liquidity management the company has been prepared for sudden shocks in the economy and the society and is therefore able to meet its customer demand also in the current situation.
The decision of the FIN-FSA enters into force immediately. Similarly, the FIN-FSA has updated capital requirements applicable to all significant credit institutions in Finland. The aim of these updates is to mitigate the negative effects of the coronavirus pandemic on the stability of financial markets and on credit institutions’ ability to finance the economy.
MUNICIPALITY FINANCE PLC
Harri Luhtala
CFO
tel. +358 50 592 9454
MuniFin (Municipality Finance Plc) is one of Finland’s largest credit institutions: the company’s balance sheet totals nearly EUR 39 billion. The company is owned by Finnish municipalities, the public sector pension fund Keva and the Republic of Finland.
MuniFin’s mission is to build a better future in line with the principles of responsibility and in cooperation with its customers. MuniFin’s customers are Finnish municipalities, municipal federations, municipally controlled entities and non-profit housing organisations. Lending is used for environmentally and socially responsible investment targets such as public transportation, sustainable buildings, hospitals and healthcare centres, schools and day care centres, and homes for people with special needs.
MuniFin’s customers are domestic but the company operates in a completely global business environment. It is the most active Finnish bond issuer in international capital markets and the first Finnish green bond issuer. The funding is exclusively guaranteed by the Municipal Guarantee Board.
The Municipality Finance Group also includes the subsidiary company, Financial Advisory Services Inspira Ltd.
Read more: www.munifin.fi