Kilvar Kessler: 2016 was very busy for Finantsinspektsioon, we implemented our new strategy and tied up loose ends
Finantsinspektsioon has published its Annual Report 2016. Kilvar Kessler, the Chairman of the Management Board of Finantsinspektsioon said that last year was very busy—we implemented our new strategy and tied up loose ends.
Certain and clear decisions of Finantsinspektsioon together with open discussions and readiness to cooperate have brought good results. The stalemate at Eesti Krediidipank, a source of threat, was resolved under the active monitoring of Finantsinspektsioon in an entrepreneurial way: the Russian credit institution exited the circle of owners and a large Estonian business conglomerate acquired control in the bank. The previous managers of Krediidipank have been replaced by new ones and a new strategy is in the works.
The large banks Nordea and DNB announced their plan to merge their Baltic businesses with headquarters in Tallinn. Estonia was supposedly chosen because of its good legal environment and activities of the supervision authority.
Last year, Finantsinspektsioon paid great attention to preventing money laundering and terrorist financing in the financial sector. We worked hard to reduce risks attributable to high-risk non-resident clients in our financial intermediaries. At the end of 2016, the share of non-resident deposits in all the deposits was 13 percent, down from 20 percent in 2014. Work in this area will definitely continue.
For Finantsinspektsioon, the year 2016 was characterised by intensive work in implementing the Creditors and Credit Intermediaries Act. We processed more than half a hundred applications for an authorisation during the year, making great efforts that the procedures of the creditors entering the market in assessing the solvency of borrowers are of a higher quality and that such companies are owned and managed by persons who meet the requirements of law. There are currently 55 creditors and credit intermediaries in the market, and additional 12 creditors who are connected to credit institutions. Their total loan portfolio in terms of consumer credit amounts to 741 million euros, including 166 million euros which belong to creditors not connected to credit institutions. Step by step, the consumer credit market is becoming more structured.
As a connecting subject, we have noticed that the risks in the crowdfunding area have increased. Crowdfunding makes it possible to finance projects which may not always qualify for other financing solutions. This, however, brings along risks, and investors have to be able to understand the presence and possible nature of these risk as early as possible. Finantsinspektsioon has made suggestions to regulate this area optimally and also open the European Union market.
In addition, we see that some credit cooperatives, who are not under the supervision of Finantsinspektsioon, are forcefully advertising depositing opportunities with high interest rates. However, people often do not distinguish between credit cooperatives and credit institutions. For example, credit cooperatives are not part of the schemes of the Guarantee Fund.