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Regulatory framework

Key policies

What are the principal governmental and regulatory policies that govern the banking sector?

The banking sector in Norway is regulated by the Financial Supervisory Authority of Norway (FSAN), the Central Bank of Norway and the Ministry of Finance. FSAN is the regulatory authority with responsibility for both prudential supervision of the institutions and market conduct supervision. The Financial Stability Department (FSD) within The Central Bank of Norway has the chief responsibility for the macro prudential oversight. Legislatively, the regulatory framework is within the responsibility of the Norwegian Ministry of Finance.

The FSAN is an independent governmental agency established under the Financial Supervisory Authority Act of 1956. Its primary objective is to promote financial stability and well-functioning financial markets. Its intermediate objectives are to promote financially sound and liquid financial institutions and robust infrastructure ensuring satisfactory payments, trade and settlement, enhance investor protection and consumer protection through good information and advice, and facilitate efficient crisis management. FSAN also supervises insurance and pension funds, securities firms and markets, debt collection, accounting and revision activities, and real estate brokerage. The FSAN also contributes in the development of the regulatory framework.

The FSD is part of the Central Bank of Norway, which is governed by the Central Bank Act of 1985. The FSD’s objective is to promote a robust financial system by monitoring financial stability and advising on measures to prevent systemic risk. The department also contributes to the development of the regulatory framework and acts as the licensing authority for interbank systems and monitoring payment systems.

Norway is not part of the European Union. EU legislative acts will therefore not apply to Norway directly. However, Norway is a part of the European internal market through the European Economic Area (EEA) agreement together with the two other European Free Trade Association states: Iceland and Liechtenstein. The EEA agreement commits Norway to implement all EU acts considered EEA relevant.

The FSAN has a permanent observer role to the European Supervisory Authorities (the European Banking Authority) (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA)). Norway also participates as an observer to the European Systemic Risk Board (ESRB) on an ad hoc basis and is part of the Financial Stability Boards (FSB) regional consultative group for Europe.

Primary and secondary legislation

Summarise the primary statutes and regulations that govern the banking industry.

The two primary statutes governing the banking sector in Norway are the Financial Enterprises Act of 2015 and the Financial Contracts Act of 1999. Other important banking sector statutes include the Financial Supervisory Authority Act of 1956, the Anti-Money Laundering and Counter Terrorist Financing Act of 2009, the Central Bank Act of 1985 and the Securities Trading Act of 2007. The statutes are all complemented by regulations.

The Financial Enterprises Act consolidates the previous Savings Bank Act, the Commercial Bank Act, the Financial Services Act and Guarantee Schemes Act (plus large parts of the Insurance Services Act) and applies to all financial enterprises as defined in the statute.

The new Financial Enterprises Act has introduced a number of amendments and consists of more than 280 sections (which is a lot by Norwegian legislative standards) and comprehensive secondary law regulations. That said, the Act does not imply larger material changes of the former legislation.

The substantial changes compared with the former legislation relate to, inter alia, new capital requirements for insurance companies incorporating:

  • Basel III and CRD IV;
  • new regulations on cooperation agreements out of group relations;
  • regulations on holding companies as parent companies in financial groups;
  • exchange of customer information between group entities;
  • removal of banks’ obligation to have control committees and boards of representatives;
  • abandoning of regulations on securitisation; and
  • changes in banks’ cash-handling requirements.

Regulatory authorities

Which regulatory authorities are primarily responsible for overseeing banks?

The FSAN is the regulator primarily responsible for overseeing banks.

Government deposit insurance

Describe the extent to which deposits are insured by the government. Describe the extent to which the government has taken an ownership interest in the banking sector and intends to maintain, increase or decrease that interest.

The governmental Norwegian Banks’ Guarantee Fund guarantees deposits of up to 2 million Norwegian kroner per, depositor per bank. The guaranteed amount is more than twice as much as the €100,000 deposit guarantee applicable in the EU, given current exchange rates.

All banks headquartered in Norway are required to maintain membership in the Banks’ Guarantee Fund. Branches of non-Norwegian banks operating in Norway have the right, but are not required, to seek membership. The right to be admitted as a member is conditional and subject to approval by the FSAN. Currently admitted branches of non-Norwegian banks are the Norwegian branches of Danske Bank, Nordea, Swedbank, Nordnet Bank, Handelsbanken, Bluestep Bank, and Skandinaviska Enskilda Banken.

It is uncertain if Norway can uphold its higher level of guaranteed deposits compared to the EU in the future. The Deposit Guarantee Scheme’s Directive (Directive 2014/49/EU) (DGSD) implements a fully harmonised level of €100,000 deposit guarantee across the EU, and the directive is considered EEA relevant. According to the DGSD, any member state with higher levels of deposit guarantees must adapt to the fully harmonised level by 31 December 2018. However, the directive has not yet been adopted in the EEA agreement, and the matter is subject to ongoing political negotiations. Statutes adopting the remaining parts of DGSD in Norway have been proposed to parliament by the Ministry of Finance on 21 June 2017 and are scheduled to be decided by parliament in March 2018.

The Norwegian state owns 34 per cent of the shares of DNB ASA, which controls DNB Bank ASA, Norway’s largest bank. The objective of this ownership is to ensure that DNB stays headquartered in Norway, which is secured by the state’s negative control. The government intends to maintain this interest but has, on the other hand, not expressed any intention to increase its ownership in the banking sector.

Transactions between affiliates

Which legal and regulatory limitations apply to transactions between a bank and its affiliates? What constitutes an ‘affiliate’ for this purpose? Briefly describe the range of permissible and prohibited activities for financial institutions and whether there have been any changes to how those activities are classified.

Transactions between a bank and its affiliates shall be carried out on an arm’s-length basis. For this purpose, ‘affiliates’ means financial enterprises within the same group, a financial institution and a subsidiary or other affiliated enterprise with a capital interest in, or shared management with, the financial institution, and a financial institution and its parent company or other affiliated enterprise with a capital interest in or shared management with the financial institution. A financial group is obliged to ensure that revenues, costs, losses and profits are distributed as accurately as possible between the enterprises and areas of operations of the group.

Group contributions and dividend combined may not exceed the threshold ‘justifiable dividend’ based on the operations of the relevant year, unless the Ministry of Finance, to secure the solvency of the group or an enterprise of the group, allows larger distributions. A subsidiary of the group may not provide group contributions to another subsidiary. Furthermore, a group enterprise may not provide loans or guarantees for another group enterprise that are not justifiable based on the capital and risk exposure of the enterprise providing such loans and guarantees. An enterprise providing loans or guarantees exceeding 5 per cent of that enterprise’s liable capital shall be required to notify the FSAN.

Regulatory challenges

What are the principal regulatory challenges facing the banking industry?

The regulatory challenges facing the Norwegian banking sector are principally issues familiar to international banking regulators and participants. These involve regulations becoming more stringent, complex and frequent, as a result of the European Union’s ambitions to establish an internal market with common regulations and harmonised supervision. Further from the abovementioned, Norwegian authorities worry about a potential housing bubble in Norway and have suggested countercyclical measures for local banks.

Consumer protection

Are banks subject to consumer protection rules?

Norwegian Banks are subject to consumer protection rules. The Financial Contracts Act, which, inter alia, implements EU Directive 2008/48/EC on credit agreements for consumers, is invariable in consumer relations and contains a number of mandatory consumer protection provisions applicable to financial contracts between banks and consumers. The provisions therein set out the banks’ disclosure duties and other obligations in relation to agreements on deposits and payment services, credit, guarantees and security.

The FSAN is responsible for maintaining the consumer protection rules through inspections and supervision. Furthermore, the FSAN regularly publishes circular letters and guidelines regarding consumer protection, including guidelines provided by the European Banking Authority.

As allowed for in the Financial Contracts Act, an extrajudicial complaints committee for consumers is established for the purposes of resolution of disputes relating to financial contracts. Most Norwegian banks are affiliated members of the complaints committee through interest groups. Interest groups of consumers, insurance companies and securities funds are also represented. The complaints committee regularly handles disputes regarding financial contracts brought to them by consumers. The committee’s decisions are precatory, but most banks (and other non-consumer parties) choose to comply with its decisions.

Disputes regarding financial contracts may also be brought before the court. In recent years, particularly cases relating to leveraged investments (often in complex structured financial products) marketed and arranged by banks for consumers, have received a great deal of attention.

Future changes

In what ways do you anticipate the legal and regulatory policy changing over the next few years?

The Norwegian regulatory policy is, to a large extent, harmonised with that of the European Union. The direct consequences for Norway of the European Union’s ambitions will be the continuous need for evaluation and harmonisation of relevant EU regulations in Norway through the EEA Agreement, which will probably require larger and more dominant regulatory bodies, even more coordinated with the equivalent EU bodies. In the third quarter of 2016, the first ‘package of acts’ on European Financial Supervisory Authorities was incorporated into the EEA Agreement.

Supervision

Extent of oversight

How are banks supervised by their regulatory authorities? How often do these examinations occur and how extensive are they?

Banks are supervised by the FSAN. Supervision is conducted in the following ways:

  • on-site inspections (based on international supervisory standards) involving the banks’ management team and board of directors;
  • off-site supervision on the basis of reporting to the FSAN (ie, regular reporting regulated by law and ad hoc reporting pursuant to the FSAN’s instructions);
  • risk-based supervision (see Pillar II of the Capital Requirements Directive);
  • all banks are required to conduct the annual Internal Capital Adequacy Assessment Process (ICAAP) to determine their actual need for capital;
  • the FSAN evaluating the respective bank’s ICAAP through the Supervisory Review Evaluation Process; and
  • supervisory collaboration: Norway has signed the European Union’s Memorandum of Understanding (MoU) on Cooperation between the financial supervisory authorities, central banks and finance ministries of the European Union on cross-border financial stability, and a similar MoU between the Nordic and Baltic countries.

The supervision of banks is already comprehensive and coordinated with EU supervision, but as indicated in question 8, the strengthening of the cooperation between the supervisory bodies of the European Union and EEA will presumably cause more frequent and coordinated supervision.

According to the FSAN’s public register, there are 25 commercial banks, 100 savings banks and 38 Norwegian branches of foreign credit institutions operating as licensed banks in Norway. Banks of all these categories are regularly subject to on-site inspections. The FSAN prioritised on-site inspections of Norway’s largest banks for supervisory review of capital and risk assessments after the 2007 to 2010 financial crisis, as a preventive measure. In general, supervision with a focus on capital adequacy and (systemic) risk prevention has increased significantly in response to the financial crisis. The FSAN also carries out on-site inspections based on specific suspicion. Such inspections may be limited to a certain area of the bank’s operations or cover larger parts of the bank’s business. The FSAN also initiates inspections with the purposes of controlling the banks’ compliance with new legislation or regulations.

Enforcement

How do the regulatory authorities enforce banking laws and regulations?

The FSAN has all regulatory powers to enforce banking laws and regulations, including issuing injunctions and orders (including orders to cease operations) and fining.

Representatives of banks wilfully or negligently violating the Financial Supervisory Authority Act or an order issued by the FSAN may be subject to fines or prison of up to three years.

What are the most common enforcement issues and how have they been addressed by the regulators and the banks?

The FSAN rarely issues fines against banks operating in Norway. The most common misconduct issues involving Norwegian banks relate to misleading investment advice and selling, or mis-selling, unsuitable complex financial products to consumers, management and control failures in relation to anti-money laundering procedures and bank system deficiencies.

Resolution

Government takeovers

In what circumstances may banks be taken over by the government or regulatory authorities? How frequent is this in practice? How are the interests of the various stakeholders treated?

Government authorities may intervene in and take control over a bank’s operations, public administration, pursuant to the rules in the Financial Enterprises Act. Public administration is triggered by the FSAN’s assessment of a bank’s deteriorating capital and liquidity situation. The criterions to be assessed are:

  • a bank is unable to meet its liabilities as they fall due;
  • a bank is unable to meet the existing capital adequacy requirements in accordance with a directive from the FSAN; or
  • a bank’s assets and incomes combined are not sufficient to meet the bank’s liabilities in full.

If the FSAN has reason to believe one of the conditions will occur, the FSAN shall notify the Central Bank of Norway and the Banks’ Guarantee Fund.

Subsequently, a second assessment on whether the bank may be secured a sufficient financial basis for continued satisfactory operations will be made. If the FSAN concludes that such sufficient financial basis may not be secured, the Ministry of Finance will be notified. The notification shall include the FSAN’s assessment on whether the bank should be subject to public administration. Based on the notification, the Ministry of Finance will make the final decision to issue an order putting the bank under public administration.

Once a public administration order has been issued, the banks governing bodies become inoperative, and an administration board, appointed by the FSAN, assumes control of the authority vested in these bodies. The operations of the bank will at this point be severely restricted; the bank will be unable to receive deposits, assume any new financial obligation or expand existing financial obligations, or pay depositors and other creditors without the FSAN’s approval.

After assuming control of the bank, the administration board shall as soon as possible determine whether the bank may be able to continue its operations, should be subjected to merger or takeover, or should be wound-up. Depending on the administration board’s decision, the position of shareholders, creditors and employees will vary substantially. In any event, creditors holding claims against the bank established prior to the administration order will be unable to distrain on, or by other means secure payment by recourse to, assets belonging to the bank.

Public administration orders in Norway are almost unheard of, with the administration of Norion Bank in 1989 being the sole example. Other public measures have, however, been implemented. During the financial crisis in Norway in 1991-92, the Norwegian state became the owner of 100 per cent of the shares in three of the largest Norwegian commercial banks (Kredittkassen, Fokus Bank and DNB), through forced write-offs of the banks’ share capital as a requirement from the state to re-fund the banks. During the financial crisis of 2007 to 2010, no Norwegian banks were set under public administration, but an administration order was passed in relation to Kaupthing Bank Hf’s branch in Norway in 2008. Two other collapsed Icelandic banks, Glitnir and Landsbanki, were administered without involvement from the Norwegian government.

It should be noted that the Ministry of Finance has proposed amendments to the Financial Enterprises Act that will implement Directive 2014/59/EU (the Bank Recovery and Resolution Directive) (BRRD). The BRRD was included in the EEA agreement on 9 February 2018. The Ministry’s proposal is scheduled to be decided by parliament in March 2018, which means a new set of rules will probably be in force in a reasonably short period of time. If adopted, the rules will apply with regards to resolution and public administration of banks prior to the above-mentioned (see question 19 for the new rules).

Bank failures

What is the role of the bank’s management and directors in the case of a bank failure? Must banks have a resolution plan or similar document?

If a bank is taken under public administration the bank’s ordinary governing bodies become inoperative once the public administration order is effective and replaced by an administration board. Until the administration board is ready to assume control, however, matters that cannot be deferred shall be decided by the last serving board of directors. When the administration board assumes control the board of directors, together with the auditor, are responsible for informing the administration board on the bank’s current status and activities (see question 15 for resolution plans).

Are managers or directors personally liable in the case of a bank failure?

The CEO and the directors may be held personally liable in the case of a bank failure if such failure has been caused by their negligence or wilful misconduct.

Planning exercises

Describe any resolution planning or similar exercises that banks are required to conduct.

Norwegian banks are currently not required by law to have recovery or resolution plans. However, the proposed implementation of the BRRD, as discussed above, will introduce a requirement for banks to draw and maintain recovery plans. The recovery plans shall describe measures to be taken if the bank’s financial situation significantly deteriorates. It must include capital and liquidity measures to restore the institution to financial soundness. Most notably, the plan shall not assume or rely on any public financial support. The plan must be updated annually or whenever the bank has substantially changed its business.

Capital requirements

Capital adequacy

Describe the legal and regulatory capital adequacy requirements for banks. Must banks make contingent capital arrangements?

The Norwegian capital adequacy requirements for banks are established in accordance with the EU Capital Requirements Directive (2013/36) (CRD IV) and the Capital Requirements Regulation (575/2013) (CRR). Neither CRD IV nor the CRR has been implemented in the EEA agreement yet, but Norwegian legislation has been adapted to comply with most of these requirements.

CRD IV is the legal framework for the supervision of credit institutions, investment firms and their parent companies in all member states of the European Union and the EEA and will be the basis of the single supervisory framework throughout the EU and the EEA when that will be formally introduced.

CRD IV partly builds on several standards issued by the Basel Committee on Banking Supervision, most notably Basel III regarding capital buffer and its buffer components, which include the capital conservation buffer, the countercyclical buffer, the global systemically important institutions buffer, the other systemically important institutions buffer, and the systemic risk buffer components. CRD IV also includes several more general provisions, concerning competence of the regulatory authorities, market entry, sanctions in case of breach of the CRD and CRR, governance and remuneration, among others. On 23 November 2016, the EU Commission published its proposal for amendments to the CRD IV and the CRR.

How are the capital adequacy guidelines enforced?

The capital adequacy guidelines are enforced through period reporting from the banks and a combination of theme-based inspections and on-site inspections from the FSAN.

Undercapitalisation

What happens in the event that a bank becomes undercapitalised?

If a bank becomes undercapitalised, the CEO and the board of directors of the bank are, independently of each other, required to notify the FSAN. Together with the bank itself, the FSAN will consider what measures are required. The FSAN has wide powers to ensure that appropriate measures are taken, for example, to call for a general meeting or to replace the board of directors.

Insolvency

What are the legal and regulatory processes in the event that a bank becomes insolvent?

If a bank becomes insolvent, the FSAN shall notify the Central Bank and the Banks’ Guarantee Fund. If it must be assumed that the bank cannot pay its dues on time, and that further funding of the ongoing operations is not available, the Ministry of Finance can decide to put the bank under public administration. However, adopting the new set of rules and implementing the BRRD, as mentioned in question 12, the regulatory approach and process will change. In the Ministry of Finance’s proposal the rules will be set out in a new Chapter 20 to the Financial Enterprises Act. The FSAN is set to be appointed the resolution authority according to the BRRD, however, with certain decisions, including decisions of major significance, conferred on the Ministry of Finance.

Prior to insolvency, if the institution infringes or is likely in the near future to infringe capital adequacy requirements, including solvency issues, the bank shall notify the FSAN. The FSAN will have powers to initiate early intervention measures, including orders to implement steps drawn up in the recovery plan, orders to call a general meeting of shareholders and orders to draw up a plan for negotiation on restructuring of the bank’s debt. If the bank’s financial situation continues to deteriorate regardless of the steps taken, the FSAN may require further steps, including a change of the management of the bank or appoint a temporary administrator of the bank for up to one year.

If the bank is failing, or is likely to fail, it has a duty to notify the FSAN. Thresholds for when an institution is failing, or likely to fail, are detailed further in the new rules. The assessment includes, inter alia, whether the bank will be unable to pay its debts or other liabilities as they fall due. If the FSAN determines that the bank is failing, or is likely to fail - either following a notification or by its own accord - and there is no reasonable prospect that any alternative private sector measures will prevent the failure of the institution within a reasonable time frame, the FSAN shall notify to the Ministry of Finance. The notification shall include an assessment of whether a resolution action is necessary in the public interest or if the institution should be wound up.

Following a notification from the FSAN, the Ministry of Finance will decide whether or not the bank is to be set under public administration. If the bank is set under public administration the FSAN shall appoint an administration board assuming control of the bank. A set of resolution tools become available for the administration board and the FSAN, including powers to sell whole or parts of the business, transfer whole or parts of the business to a bridge bank, transfer whole or parts of the business to an asset management vehicle and recapitalise the institution using a bail-in tool.

The proposal also entails that the rules set out under question 12 no longer will apply to banks. Accordingly, if the Ministry of Finance decides not to put the bank under public administration pursuant to the new rules, ordinary insolvency proceedings will apply.

Recent and future changes

Have capital adequacy guidelines changed, or are they expected to change in the near future?

See question 16.

Ownership restrictions and implications

Controlling interest

Describe the legal and regulatory limitations regarding the types of entities and individuals that may own a controlling interest in a bank. What constitutes ‘control’ for this purpose?

The legal framework on ownership in banks is based on ownership control rather than ownership restrictions. Accordingly, there are no express statutory limitations to which types of entities and individuals may own a controlling interest in a Norwegian bank. However, any entity or individual who acquires a controlling interest are subject to the Ministry of Finance’s approval, or the FSAN in cases not considered important. The approval is granted on the basis of a fit and proper testing of the entity where the Ministry of Finance of the FSAN will consider the acquirer’s qualification as owner in relation to the bank’s activities. The factors considered by the Ministry of Finance or the FSAN in such approval are explained under question 25.

A ‘controlling’ interest for the purposes of the ownership regulations constitutes more than 10 per cent of the capital or voting rights, or other interest that provides material influence, in the bank. Such interest is referred to as a ‘qualified interest’.

In relation to the institution’s application for authorisation to carry out banking activities it should be noted that three-quarters or more of the share capital must be dispersed through a capital increase or sale effected without any preferential or pre-emption right for shareholders or others, known as a ‘dispersion sale’.

Ownership is further subject to regulatory practice set out by the Ministry of Finance. According to regulatory practice, no single entity may hold more than 25 per cent of the shares in a bank, unless the owner is a financial institution itself. The purpose of the limit is to ensure the independence of the institutions and to prevent private banker activities. Under special circumstances there may be made exceptions to this limitation, and such exceptions have been granted on a few occasions.

A recent judgment by the EFTA Court challenges the above-mentioned dispersion sale rule and the regulatory practice setting out the 25 per cent limitation rule, on the basis that they unjustifiably infringe on the internal markets’ freedom of establishment. In its judgment, the EFTA Court first concludes that the dispersion sale rule is not suitable to achieve its otherwise legitimate objective, and therefore is not compatible with EEA law. Second, the EFTA Court found that the limitation rule was suitable to achieve the legitimate objective to the extent that it applies to applications for authorisation as a bank but not, however, to secondary acquisitions after the granting of authorisation. The case for Oslo District Court has not yet been decided and it is at this point unclear if the dispersion sale rule and 25 per cent limitation will be ruled lawful or not by the District Court.

Foreign ownership

Are there any restrictions on foreign ownership of banks?

There are no additional regulatory restrictions on foreign ownership of banks in Norway, apart from the general rules outlined in this section.

Implications and responsibilities

What are the legal and regulatory implications for entities that control banks?

An entity that owns a ‘qualified interest’ in a bank is responsible for complying with the terms of the approval given by the Ministry of Finance for such ownership. The Ministry of Finance may revoke the approval at any time if the terms of the approval are no longer met. Special regulatory requirements relevant for the shareholders apply upon the occurrence of insolvency or capital inadequacy of the bank (see question 25).

Further, any owner with a 20 per cent or higher shareholding may be subject to capital requirements on a consolidated basis.

What are the legal and regulatory duties and responsibilities of an entity or individual that controls a bank?

In addition to being responsible for complying with the terms of the ownership authorisation issued by the Ministry of Finance or the FSAN, an entity with a qualified interest in a bank is required to notify the FSAN of changes to the entity’s board of directors, management and shareholders. The FSAN may require additional information if it considers it necessary for their ownership control.

What are the implications for a controlling entity or individual in the event that a bank becomes insolvent?

Upon the occurrence of insolvency or capital inadequacy, the board of directors and the managing director of the bank are required to notify the FSAN. The FSAN will subsequently consider alternative measures together with the bank, and the Central Bank of Norway will be notified. The FSAN will also be authorised to call for a general meeting to be held, involving all shareholders of the bank. If the assessment of the bank’s solidity implies that a significant share of the bank’s equity capital is lost, the board is required to call for a general meeting immediately. This requirement also applies if 25 per cent of the bank’s share capital, or 25 per cent of the bank’s primary capital and basic capital combined if the bank is not organised as a private or public limited company, is lost. In these events, the general meeting must resolve, inter alia, whether the bank has sufficient capital to adequately continue its operations. The general meeting’s resolution is subject to approval by the FSAN. The general meeting may also resolve to transfer the bank’s operations to other financial institutions or resolve winding-up.

Changes in control

Required approvals

Describe the regulatory approvals needed to acquire control of a bank. How is ‘control’ defined for this purpose?

Any entity or individual who acquires a ‘qualified interest’ in a bank is required to notify the FSAN of the acquisition. As noted above, a ‘qualified interest’ is defined as controlling more than 10 per cent of the capital or voting rights in the bank, or any other interest which provides material influence of the bank. Similar notifications shall also be filed for any acquisition resulting in the entity exceeding 20, 30 or 50 per cent or when controlling influence is achieved and shall contain specific information according to the Financial Services Act and appurtenant regulations.

The acquisition is then subject to regulatory approval by the Ministry of Finance or the FSAN, which will consider the acquirer’s qualification as owner, and if the acquisition is financially adequate in relation to the bank’s activities. Pursuant to the Financial Enterprises Act, the Ministry of Finance or the FSAN shall consider, inter alia:

  • the acquirer’s general reputation, professional competence, experience and previous conduct in business relationships;
  • the general reputation, professional competence, experience and previous conduct in business relationships of persons who will form part of the board of directors or management of the bank’s activities;
  • whether the acquirer will be able to use the influence conferred by the acquisition to obtain advantages for its own or associated activities, or indirectly exert influence on other business activity, and to whether the acquisition could result in impairment of the bank’s independence in relation to other business interests;
  • whether the acquirer’s financial situation and available financial resources are adequate, especially in relation to the types of activities in which the institution is will be engaged, and whether the acquirer and its activities are subject to financial supervision;
  • whether the bank is and will continue to be in a position to meet the solvency and prudential requirements and other supervisory requirements that follow from the financial legislation;
  • whether the ownership structure of the bank after the acquisition or particular ties between the acquirer and a third party will impede effective supervision of the bank, in particular whether the group of which the bank will form part after the acquisition is organised in a manner that does not impede effective supervision; and
  • whether there are grounds for assuming that money laundering or financing of terrorism, or any attempt to commit such act, is taking place in connection with the acquisition, or that the acquisition will increase the risk of such act.

Increases in ownership reaching 20, 30 or 50 per cent of the capital or voting rights in the bank, or any ownership share providing dominant influence pursuant to the provisions of the Public and Private Companies Acts, also require notification and approval by the regulatory authorities. As set out in question 25, any ownership in excess of 25 per cent will only be allowed for financial institutions.

As a general rule, the decision to authorise the acquirer or not shall be made within 60 business days from the time the FSAN confirmed receipt of the acquirer’s notification.

Foreign acquirers

Are the regulatory authorities receptive to foreign acquirers? How is the regulatory process different for a foreign acquirer?

As noted under question 22, there are no regulatory restrictions on foreign ownership of banks in Norway. The authorisation process is not different for a foreign acquirer, but it may be more challenging, especially if the acquirer is incorporated in a country outside the European Union or EEA.

If the acquirer is a credit institution, insurance company, investment firm or holding company for a securities fund authorised to operate in another EEA member state, the FSAN shall consult the regulatory authorities of that member state before making a decision.

Factors considered by authorities

What factors are considered by the relevant regulatory authorities in an acquisition of control of a bank?

The factors considered by the Ministry of Finance or FSAN in an acquisition of control of a bank are listed under question 26.

Filing requirements

Describe the required filings for an acquisition of control of a bank.

The required filing for an acquisition of control of a bank is limited to the notification described under question 26. Pursuant to current law, the notification shall as a minimum include information regarding:

  • the size of the acquired holding;
  • the size of the overall holding in the bank after the acquisition;
  • complete information about the acquirer (if the acquirer is an entity, information about the entity’s board of directors, management, owners and beneficial or ultimate owners);
  • information about the target bank;
  • the acquirer’s evaluation of the bank’s financial position and activities;
  • the acquirer’s business operations and available financial resources;
  • the acquirer’s ownership interests in other financial institutions;
  • other owners with which the acquirer shall be consolidated; and
  • the purpose of the acquisition.

Furthermore, the notification shall include responses to, inter alia:

  • whether the acquirer has been filed for bankruptcy in Norway or abroad during the past 10 years;
  • whether the acquirer during the past 10 years has been convicted for a criminal offence in Norway or abroad;
  • whether the acquirer is indicted or charged for a criminal offence in Norway or abroad;
  • whether the acquirer during the past 10 years has been subject to tax estimation or surtax or equivalent in Norway or abroad;
  • whether the acquirer during the past 10 years has been subject to fines or penalties pursuant to the Norwegian Financial Supervisory Authority Act, the Securities Trading Act, the Accounting Act or securities legislation, or equivalent statutes abroad;
  • whether the acquirer during the past 10 years has had board positions, management positions or qualified ownership interest in entities involved in the above; and
  • whether the acquirer previously has been assessed for authorisation as acquirer of a qualified ownership interest in a financial institution in Norway or abroad.

The FSAN may also require additional information at its discretion.

Timeframe for approval

What is the typical time frame for regulatory approval for both a domestic and a foreign acquirer?

Irrespective of the acquirer being domestic or foreign, the regulatory authorities in Norway are bound by the Financial Services Act to make a decision regarding the authorisation, as a main rule, within 60 business days from the time the FSAN received the acquirer’s notification about the acquisition.

If, however, the Ministry of Finance or the FSAN, before 50 business days have lapsed since the notification, requires additional information in writing, the time limit will be extended. Pursuant to current law, the maximum extension is 20 business days in cases where the acquirer is subject to supervision or resident in the EEA. The typical time frame for regulatory approval is notification plus 60 business days.