Seven Finnish Banks Outlooks Revised To Negative On Deepening COVID-19 Downside Risks

Despite European governments' measures to contain the COVID-19 pandemic, their economies, including Finland's, are facing an unprecedented challenge. We expect Finland's wide-ranging fiscal and related monetary measures to substantially mitigate this extraordinarily sharp shock to the economy, and so also support the banking system in its key role as a conduit of fiscal and monetary support. Even in our base case of an economic recovery starting in third-quarter 2020, we expect bank earnings, asset quality, and in some cases capitalization, to weaken meaningfully throughout 2020 and into 2021. That said, we continue to see differentiated implications for banks in the system. Because of these factors and our view that downside risks remain substantial, we are revising our outlooks to negative

...- Despite European governments' measures to contain the COVID-19 pandemic, their economies, including Finland's, are facing an unprecedented challenge. - We expect Finland's wide-ranging fiscal and related monetary measures to substantially mitigate this extraordinarily sharp shock to the economy, and so also support the banking system in its key role as a conduit of fiscal and monetary support. - Even in our base case of an economic recovery starting in third-quarter 2020, we expect bank earnings, asset quality, and in some cases capitalization, to weaken meaningfully throughout 2020 and into 2021. That said, we continue to see differentiated implications for banks in the system. - Because of these factors and our view that downside risks remain substantial, we are revising our outlooks to negative on Finnish banks Aktia Bank, Bank of Aland, Bonum Bank, Central Bank of Savings Banks Finland, Oma Savings Bank, OP Corporate Bank, and The Mortgage Society of Finland. - We could take further...

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