Snapshot: Regulation of bank lending in Finland



Capital and liquidity requirements

Describe how capital and liquidity requirements affect the structure of bank loan facilities, including the availability of appropriate facilities.

The stricter capital and liquidity requirements from EU and other supranational sources have of course affected the availability of long-term unsecured credit.

Disclosure requirements

Are there bank loan disclosure requirements for debtors of public companies?

The disclosure requirements are in the Securities Market Act (746/2012, as amended) Implementation, for example, of the prospectus regulations of the EU Prospectus Regulation (2017/1129) and the EU Market Abuse Regulation (596/2014). In principle, a bank loan facility only needs to be disclosed to the market as a relevant fact if it qualifies as inside information within the meaning of the ordinance or if it affects the value of the shares in the stock corporation. Of course, a company’s annual financial statements must contain information on loans and other financing.

Use of the loan proceeds

How is the debtor’s use of bank loan proceeds regulated? What liability might investors face if the debtor uses the proceeds illegally? Can investors reduce their liability?

The use of the bank loan proceeds is basically free between the parties, but the use of at least the temporary loan proceeds for acquisition financing is typically controlled by the banks through the flow of funds.

Anti-money laundering and anti-terrorist financing controls should be in place before funds are transferred to the borrower. Lenders must:

  • know their customers’ business;
  • detect and investigate suspicious transactions; and
  • report each of these suspected cases.

Finland has implemented the Fifth EU Anti-Money Laundering Directive (2018/843) and the prevention of money laundering and terrorist financing is based on international standards.

Investors can mitigate their liability by exercising diligence in their lending (including verifying your clients and combating money laundering and the actual use of the proceeds).

Cross-border lending

Are there rules that restrict an investor’s ability to lend to debtors who are organized or active in certain jurisdictions? What liability are investors exposed to in lending loans to such debtors? Can investors reduce their liability?

Yes. Sanction regimes must be adhered to. Investors can mitigate their liability by exercising diligence in their lending (including ensuring that the borrower complies with the sanctioning regime).

Leverage profile of the debtor

Are there any limitations on an investor’s ability to provide credit to a debtor based on the debtor’s leverage profile?

No; However, the guidelines of the European Central Bank (ECB) on leveraged transactions came into force in November 2017 and apply to all major credit institutions that are supervised by the ECB under the EU regulation on the single supervisory mechanism (1024/2013).

interest charges

Do regulations limit the interest rate that can be charged on bank loans?

No. The Criminal Code basically forbids usury in lending, but this would not be relevant for typical bank financing. Furthermore, the Consumer Protection Act (38/1978, as amended)) contains specific restrictions on the interest and costs that may be placed on consumer loans.

Currency restrictions

What are the restrictions on investors obtaining bank loans in a currency other than the local currency?

There are no such restrictions.

Other regulations

Describe any other regulatory requirements that affect the structuring or availability of bank credit.

There are no further regulatory requirements that affect the structuring or availability of bank loans. However, the provision of services in Finland by banks, other credit institutions, investment firms or other regulated companies may be subject to licensing requirements or the company’s home state license to Finland, unless no sales promotion, solicitation or solicitation has been carried out in relation to customers in Finland carried out.

Act specified date

Correct on

Provide the date when the above content is correct.

May 6, 2020.


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