Today the lobby group representing Finnish banks announced that they are now close to being on the hook to cover the losses of their competitor banks in other parts of Europe! The poor dears are worried that they may end up paying into a European lifeboat fund that supports European banks that get into trouble.
Finnish banks have a long history of being bailed out by taxpayers and various past and present governments has encouraged them to merge together with generous benefits being accorded to keep banks afloat and profitable.
The most recent example is the generous support from the Finnish Central Bank (the branch of the European Central Bank) in handing out huge amounts of “Covid loans” to banks at negative interest rates. At the same time the banks have been allowed to charge a zero reference interest rate for loans even when the market reference rate for the same period is negative.
In other words, banks are not allowing private customers and small companies to benefit from negative interest rates on loans. Customers must pay interest even when banks can finance these same loans with the same reference rates without having to pay any interest, but actually get paid to borrow! They get a double payment of interest for a single loan!
Banks, like all good right-wing folk, are always lecturing that open markets are a more efficient that closed or “administered markets” (those preferred by the neighbours in Russia), but here are banks literally reaping huge profits from ordinary clients, who are without any protection from regulators. The banks have truly hijacked the mortgage market here!
The second big heist by banks is that they have received huge benefits from government payouts (read taxpayers’ cash) to small and mid-size companies and who have suffered from the pandemic. Last year, the banks set aside huge reserves for expected credit losses that did not happen. Now they are writing back these reserves as income and “WOW!” they are they paying out huge dividends to shareholders because they have made so much money!
Your correspondent is of the opinion that the government should have demanded shares from those banks that have benefited from such generosity… Can you imagine a situation where private equity boys put money into a bank without taking shares in return? Somebody in the government needs some lessons in economics, and the banks need to start being a little more humble…
You correspondent will stop here because he can hear the bank mumbling in the streets outside his house. They are a fearsome lot, out for your blood and sweat… a bit like those colonial emperors, and finance ministers that always demanded more of their minions, even though they were already poor as church mice…
But no, banks will never be humble – now they are screaming about having to pay for southern European banking losses!