FI Supervision 3: Survey of Market Risks in Savings Banks

Finansinspektionen (FI) has conducted a survey of the management of market risks by savings banks and of their holdings in financial assets. FI’s assessment is that the majority of savings banks are managing their market risks in an acceptable manner.

There are indications that some savings banks do not have a sufficient internal control of their market risks. This may lead to unexpectedly large losses. Depending on the circumstances, the lack of control could also mean that these savings banks are not complying with the applicable regulations concerning measurement, governance and control of market risks.

The survey also shows that many savings banks are holding a relatively large portion of their financial assets for the purpose of yielding a return for their own operations. In order to achieve this, varying degrees of risk are accepted. FI's overall assessment is that the financial assets are generally associated with moderate risk, but that there are some savings banks whose holdings have a higher level of risk.

In this report we present the conclusions from the survey FI conducted in the winter of 2017–2018. The survey encompassed the 59 savings banks that are under FI's direct supervision and was conducted with the aid of an information-gathering process and a questionnaire. In those areas where the survey has indicated there are weaknesses and shortcomings, we will be following up the observations in our supervision.

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