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Norway banking sector robust but pandemic, rates pose risks, central bank says -Breaking

by Mike Robinson

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© Reuters. FILE PHOTO – A view of Oslo’s Norwegian central bank. This is where Norway’s sovereign wealth fund is located. REUTERS/Gwladys Fouche

OSLO (Reuters – Norwegian banks are prepared for any downturn. Economic recovery has also improved financial stability. But there remain risks.

“The stress tests in this report show that the biggest Norwegian banks are capable of weathering a severe downturn without having tighten lending substantially,” said Deputy Governor Ida Wolden Bache in a statement.

Although pandemic-related uncertainty is now under control, there are still risks that shocks could undermine Norway’s financial stability. This includes a return of COVID-19 or an abrupt rise in risk premiums and interest rates.

According to the report, Norges Bank stated that the outlook for financial stability was unchanged despite the recent recovery.

The system’s main weakness is high household debt. However, the report also stated that banks in Nordic countries have plenty of funding access and the capacity to absorb losses. This was lower than expected in 2020.

The bank stated that although losses are likely to stay low, the outlook for the future is uncertain.

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