Norway proposed to strengthen its bank guarantee crisis fund by removing the upper limit to pave the way for set annual fees, the Finance Ministry said.
Building up the fund will make it better equipped to handle difficulties for individual banks and the industry as a whole, Finance Minister Sigbjoern Johnsen said in a statement today.
The minister, ahead of a white paper to parliament today, also reiterated that capital requirements for Norwegian banks should increase faster than is being considered at an international level, without being more specific.
“The Norwegian economy is relatively strong, which makes it easier and cheaper for the banks to build up their capital,” he said in a statement. “We also have special challenges in Norway. We have never had such high household debt levels and house prices as now.”
The ministry said banks such as DNB ASA (DNB) will have to pay an annual fee to the fund, which in 2010 was on average 0.045 percent of their capital. In total, Norwegian banks paid 1.7 billion kroner ($289 million) into the fund in 2010, the last year that banks had to contribute. The fund’s current size is 24 billion kroner.
The fund’s main task is to cover deposits in member banks. Norwegian law states that deposits in a bank are guaranteed up to 2 million kroner.
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