(Bloomberg) -- Finland's financial industry should prepare for potential turmoil on the global markets, the Financial Supervisory Authority warned.
“An abrupt, significant correction in interest rates in the global financial markets would also have a negative impact on Finnish financial sector entities,” the regulator said in a report published in Helsinki on Wednesday. “This could be triggered by, for example, tensions in global trade relationships or adverse developments in emerging economies.”
That would reduce business volumes and a possible “negative spiral in the real economy” would hurt the industry, the FSA, led by Director General Anneli Tuominen, said. While the country's financial companies have a strong capital position, their profitability has weakened due to lower returns and the costs of development projects, mostly in information technology, the regulator said.
Even so, a smooth exit from exceptionally low interest rates remains the base case scenario for the FSA.
To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Nick Rigillo
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