Norwegian Finanstilsynet submitted a consultation response to the Ministry of Finance on NOU 2024:22, backing the Savings Bank Committee’s proposed changes to Norwegian savings banks’ capital structure. The response supports amendments to the equity certificate regime and a new ownership share model intended to remove uncertainty over whether savings banks meet common equity tier 1 requirements under the Capital Requirements Regulation (CRR), and it also endorses strengthened rules for savings bank foundations. Finanstilsynet further supports abolishing savings banks’ ability to pay customer dividends from the base capital share of profits. The submission highlights the current asymmetry in how profits and losses are allocated between base capital and paid-in owner capital, arguing that the resulting lack of pari passu loss absorption means equity certificates may not meet CRR criteria, a concern also reflected in feedback from the European Banking Authority in 2022 for banks with low equalisation funds. Finanstilsynet supports changing the loss coverage priority order and adopting the committee’s ownership share model to simplify and increase transparency, while proposing that equity certificate holders’ influence should be more proportional to the ownership fraction by widening the current floor and ceiling for representation rights to 10 and 50 percent. It also backs retaining supervisory approval of subscription prices in capital increases, suggests mechanisms to mitigate undue dilution of base capital in discounted issues, supports lifting limits on conversion to a joint-stock form but retaining the authorities’ ability to set minimum foundation ownership stakes, and proposes notification and intervention powers around significant foundation sell-downs. Finanstilsynet indicated it will communicate with the European Banking Authority on the proposed equity certificate rule changes and the further process, and it will send the Ministry separate proposals for legislative drafting changes.
Norwegian Finanstilsynet 2025-02-04
Norwegian Finanstilsynet endorses reforms to savings banks’ equity certificates and supports abolishing customer dividends
Norwegian Finanstilsynet supports the Savings Bank Committee’s proposed changes to Norwegian savings banks' capital structure, including equity certificate amendments and a new ownership model. The response addresses compliance with common equity tier 1 requirements and advocates changes to loss coverage priority and representation rights. Finanstilsynet also supports abolishing customer dividends from base capital profits and plans to communicate with the European Banking Authority on these proposals.