Chairman of the Board of FSA: The Estonian financial market is stable and supervision commonly conservative; major challenge is supporting the diversity of financial sector
On 3 May 2016, Kilvar Kessler, the Chairman of the Management Board of the Financial Supervision Authority, presented an overview of the FSA’s activities in 2015 and the current situation of the Estonian financial market to the MPs at the Riigikogu.
Kessler said that the state of the Estonian financial sector in 2015 was sound. An increased intention to enter into the Estonian regulated financial market either through the application of an authorisation or the acquisition of a company or a qualifying holding was notable. Some financial intermediaries changed their strategy of operating in the Estonian market. The volume of loans granted by credit institutions increased and the quality of the loan portfolio maintained its sound level, whereas the volume of deposits grew. Investment funds increased mainly due to the growth of mandatory pension funds. The indicators in the insurance sector were generally good.
Due to Estonia’s geographical position and the current international situation, the FSA paid great attention in 2015 to the prevention of money laundering and terrorist financing. As a result of supervision activities these risks in the regulated financial sector are diminishing. “In general, Estonia is an open and transparent country with a law-abiding business culture. We must support the continuation and development of these values”, Kessler emphasised in his speech.
When commenting on the single prudential banking supervision in the euro area that has been in force for over a year, the Chairman said that this banking supervision is the right way to achieving a single market, but there are many steps to be taken until the single market starts to really function. “The main message of the FSA in the European banking supervision has been a common conservatism when dealing with risks, uniform approach to similar situations, and an open and respectful dialog with the market and partners. We believe that the Estonian financial stability is a good role model for Europe”, said Kessler.
The initiatives in the European Union to additionally regulate the financial sector after the last financial crisis have been unprecedentedly large and a great challenge for regulators, supervisors and market participants. Kessler said that in the face of the regulatory avalanche it is an important challenge for Europe as well as Estonia to maintain its competitiveness in the region and the diversity of the financial sector, i.e. to give also an opportunity to small providers of technical innovation solutions.
Financial Supervision Auhtority Yearbook 2015 (pdf)