4 Regulatory amendments and licences in major financial market matters
4.1 Regulatory developments
Sections 4.1.1 to 4.1.6 of this chapter provide an overview of the main financial market regulatory amendments in 2013. Section 4.1.7 provides a brief overview of regulations laid down in 2013. Section 4.2 lists key licences granted that same year, with a brief discussion of each case.
The overarching objective of regulatory amendments within the financial markets area in 2013 was to promote financial stability and well-functioning markets.
4.1.1 Banking
On 10 June 2013, the Storting adopted amendments to the Financial Institutions Act and the Securities Trading Act. The legislative amendments are discussed in Legislative Proposition No. 96 (2012–2013) to the Storting, Amendments to the Financial Institutions Act and the Securities Trading Act (new capital requirements, etc.). The legislative amendments entered into effect on 1 July 2013.
The legislative amendments constitute a first step in the adaptation to CRD IV, the EU regulatory framework based on the recommendation of the Basel Committee on new capital and liquidity standards adopted in December 2010. The statutory capital adequacy requirements are 4.5 percent CET1 capital ratio, 6 percent tier 1 capital ratio and 8 percent capital adequacy ratio. In addition to the minimum requirements, institutions shall have CET1 capital buffers. A 2.5 percent capital conservation buffer is required from 1 July 2013. The systemic risk buffer is introduced gradually, with a 2 percent systemic risk buffer being required from 1 July 2013, increasing to 3 percent from 1 July 2014. The level of the said buffer may be adjusted upwards or downwards. The buffer for systemically important institutions shall be 1 percent from 1 July 2015 and 2 percent from 1 July 2016. The 9 percent CET1 capital ratio requirement remains in effect until 1 July 2014. The requirement will then be increased to 10 percent, and again to 11 percent from 1 July 2015. The Ministry of Finance proposes, in the preparatory works of the legislative amendments, that the capital conservation buffer, counter-cyclical buffer and systemic risk buffer requirements shall not, for the time being, apply to investment firms.
On 4 October 2013, the King in the Council of State laid down regulations on counter-cyclical capital buffers. The regulations establish the system of counter-cyclical capital buffers. The counter-cyclical capital buffer requirement shall apply to banks, credit undertakings and parent companies of banking groups. The purpose of the counter-cyclical capital buffer is to make institutions stronger and more robust to loan losses in a future recession and reduce the risk that banks contribute to deepening a recession by curtailing their granting of credit. The regulations stipulate that Norges Bank shall prepare a basis for decision making and advise the Ministry of Finance as to the level of the counter-cyclical capital buffer four times a year. In preparing such basis for decision making, Norges Bank shall exchange relevant information and assessments with Finanstilsynet.
On 12 December 2013, the Ministry of Finance laid down regulations on the level of the counter-cyclical capital buffer. The regulations stipulate that the counter-cyclical capital buffer shall be 1 percent of risk-weighted assets as from 30 June 2015.
Amendments to the Capital Requirements Regulations were adopted on 13 October 2013, with the lower limit on Loss Given Default (LGD) when using internal risk models for residential mortgages being increased from 10 to 20 percent for all loans secured on residential property in Norway. The amendments entered into effect on 1 January 2014.
On 27 September 2013, the Ministry of Finance adopted amendments to Regulations of 18 December 2009 No. 1726 relating to the Committee for the Monitoring of Anti-Money Laundering Measures. The amendments were predominantly of a technical nature, but also introduced supplementary requirements on the dealings of the Monitoring Committee. The amendments entered into effect on 1 July 2014.
On 22 March 2013, the Ministry of Finance adopted regulations on computer system requirements and reporting to the Norwegian Banks’ Guarantee Fund, in replacement of Regulations of 19 May 2010 No. 706. The new regulations stipulate system requirements, as well as requirements concerning the format and contents of the reports to be submitted to the Norwegian Banks’ Guarantee Fund when a decision has been made to place a bank under public administration. The regulations entered into effect on 1 July 2013.
Finanstilsynet has, at the request of the Ministry of Finance and in consultation with Norges Bank, performed an assessment of the system for determining the so-called Norwegian Interbank Offered Rate (NIBOR) and measures to strengthen the financial system. In 2013, Finanstilsynet conducted inspections of the six panel banks: DNB Bank ASA, Nordea Bank Norge ASA, Handelsbanken, Danske Bank, Skandinaviska Enskilda Banken AB and Swedbank Norge.
4.1.2 Insurance and pensions
On 13 December 2013, the Storting adopted the Act relating to Occupational Pensions (the Occupational Pensions Act). The Act entered into effect on 1 January 2014 and enables businesses to choose a new tax-favoured group occupational pension product for their employees. The new occupational pension product will represent an alternative to the existing mandatory occupational pension schemes and defined-contribution pension schemes. The amendments form part of the process of adapting the private sector pension legislation to the new retirement pension provisions under the national insurance scheme.
On 13 December 2013, the Ministry of Finance adopted amendments to Regulations of 22 December 2000 No. 1413 relating to Act of 24 November 2000 No. 81 relating to Occupational Defined-Contribution Pensions (the Defined-Contribution Pensions Act), which imply that the maximum contribution rates for defined-contribution pension schemes are increased to the same level as the contribution rates for the new occupational pension product, and that the so-called levelling-off point is increased from 6 to 7.1 times the national insurance base amount (G). The amendments shall apply from 1 January 2014.
In a letter of 8 March 2013 to all life insurers, Finanstilsynet stipulated new minimum requirements for group life insurance mortality rate assumptions.
4.1.3 Securities trading and securities funds
On 14 May 2013, the Ministry of Finance adopted amendments to Chapter 7 of Regulations of 29 June 2007 No. 876 relating to the Securities Trading Act (the Securities Trading Regulations), in order to implement the EEA provisions corresponding to Regulation (EU) No. 311/2012, Regulation (EU) No. 486/2012 and Regulation (EU) No. 862/2012 on prospectus contents. The amendment entered into effect on 1 July 2013.
On 4 July 2013, the Ministry of Finance adopted amendments to Section 36 of Regulations of 29 June 2007 No. 875 (the Securities Exchange Regulations), providing for the members of the Stock Exchange Appeals Committee to be appointed for a term of up to four years. The background to the amendment is a need for more systematic appointment timings.
On 18 December 2013, the Ministry of Finance repealed Regulations of 20 December 1996 No. 1247 relating to Issue Price and Obligation to Report the Issuance of Bearer Bonds, etc. The repeal implies that there are no restrictions on the issuance of bonds at a price below the redemption price («at a discount»). The repeal also implies the abolition of the obligation to report bond issuances to Norges Bank under the said regulations. The repeal entered into effect on 1 January 2014.
4.1.4 Estate agency
On 21 June 2013, the Ministry of Finance adopted amendments to Regulations of 23 November 2007 No. 1318 relating to Estate Agency. The amendments imply that bidding rounds organised through an estate agent shall be documented. The estate agent shall only process bids, acceptances and rejections made in writing. Any information from the estate agent to the bidders and the seller during the bidding round shall also be in writing. SMS and e-mail messages qualify as being “in writing”. In addition, all bidders need to document their identity before submitting any bids. The purpose of the amendments is to make it safer for consumers to make residential property purchases, by making it simple to establish, after the bidding round, what has been communicated to and from the participants during such round. The amendments entered into effect on 1 January 2014.
4.1.5 Accounting, auditing and bookkeeping
In Act of 19 April 2013 No. 15, the Storting enacted amendments to the Accounting Act and certain other acts. The amendments imply that accounting entities qualifying as large enterprises for purposes of the Accounting Act shall, in their annual reports or other documents, present their policy on the integration of considerations relating to human rights, employee rights, social matters, the external environment and corruption prevention in their business strategy, in their daily operations and in their stakeholder relations. In addition, they shall specify how they go about turning such policy into action, and provide an assessment of what has been achieved and expected future achievements.
The said Act of 19 April 2013 No. 15 also enacted an amendment to the Auditing and Auditors Act, authorising Finanstilsynet to grant individual exemptions from the requirement for audit firms to have a permanent establishment in Norway if documents pertaining to clients in Norway are stored at a location in this country in a sound and secure manner. Moreover, a statutory provision was added to the effect that the auditor shall assess information disclosed in connection the corporate social responsibility presentations pursuant to the Accounting Act, which are included in annual reports or other documents. Likewise, the auditor shall in the auditor’s report comment on such presentations and the statements made in annual reports or other documents with regard to corporate social responsibility. Royal Decree of 19 April 2013 No. 395 stipulates that the amendments shall apply with effect from financial years commencing after 31 December 2012.
In Act of 22 December 2013 No. 116, the Storting enacted amendments to the Accounting Act on so-called country-by-country reporting (CCR). The amendments imply that accounting entities engaged in the extractive industry and/or forestry in primary forests and classified as «large» for purposes of the new Accounting Directive, shall prepare and publish an annual report on such activities. The report shall, inter alia, disclose payments to governments, at the country and project level. Corresponding amendments were made to the Securities Trading Act, thus implying that the same obligation applies to corporations that are issuers of securities and engaged in activities of the abovementioned type. The legislative proposal was published in Legislative Proposition No. 1 (2013–2014) to the Storting. The Ministry of Finance laid down regulations with supplementary provisions on 20 December 2013. These amendments to statues and regulations entered into effect on 1 January 2014, with effect for financial years commenced on 1 January 2014 or later.
In Act of 22 December 2013 No. 121, the Storting enacted amendments to the Bookkeeping Act. The amendments imply that the storage period for so-called primary documentation is reduced from 10 to 5 year. At the same time, the Ministry was authorised to adopt regulations requiring a longer storage period for certain types of primary documentation if necessary for mandatory financial reporting purposes or for tax audit purposes. It was announced, in connection with the legislative amendment, that it would be necessary to adjust the adjoining regulatory framework in response to this, and that one would also review those areas where the need for older documentation tends to be most pronounced, to examine whether remedial measures are needed. The legislative amendment entered into effect on 1 February 2014. At the same time, the Ministry of Finance adopted regulations setting out transitional provisions, and instructed the Directorate of Taxes to examine whether a longer storage period is necessary for certain types of documentation needed for tax audit purposes, as well as for combating white-collar crime.
On 17 January 2013, the Ministry of Finance adopted amendments to the Annual Financial Statement Regulations for banks and mortgage companies. These amendments relate to note information. Investments in Norwegian companies require the enterprise registration numbers of such companies to be included in notes, and the note requirements with regard to capital adequacy have been amended in conformity with applicable capital adequacy rules.
On 19 December 2013, the Ministry of Finance amended Regulations of 16 December 1998 No. 1240 relating to the Annual Financial Statements, etc., of Banks, Financial Undertakings and their Parent Companies. The amendments imply that banks and financial undertakings that have not issued listed securities shall also recognise and measure pension liabilities in conformity with IFRS (IAS 19) as from the 2015 financial year. Moreover, a requirement was introduced to the effect that such institutions shall publish their annual financial statements, annual reports and auditor’s reports on their websites.
On 19 December 2013, the Ministry of Finance amended Regulations of 16 December 1998 No. 1241 relating to the Annual Financial Statements, etc., of Insurance Companies. The amendments imply that insurance companies that have not issued listed securities shall also recognise and measure pension liabilities in conformity with IFRS (IAS 19) as from 2015. In addition, certain adjustments were made to the regulations as the result of amendments to IFRS, principally with effect from 2014. Besides, a requirement was introduced to the effect that such institutions shall publish their annual financial statements, annual reports and auditor’s reports on their websites, with effect from the 2013 financial year onwards.
On 19 December 2013, the Ministry of Finance amended Regulations of 20 December 2011 No. 1457 relating to the Annual Financial Statements of Pension Undertakings. The amendments imply that pension undertakings will be required to recognise and measure pension liabilities in conformity with IFRS (IAS 19) from 2015. In addition, certain adjustments were made as the result of amendments to IFRS, principally with effect from 2014. Besides, a requirement was introduced to the effect that such institutions shall publish their annual financial statements, annual reports and auditor’s reports on their websites, with effect from the 2013 financial year onwards.
On 28 June 2013, the Ministry of Finance amended Regulations of 1 December 2004 No. 1558 relating to Bookkeeping. The amendments are based on, inter alia, the proposals in sub-reports number 2 and 3 from the Norwegian Bookkeeping Standards Board, which reviewed experience with the existing regulations. The amendments may reduce the administrative costs of businesses by up to NOK 300 million per year. The amendments entered into effect on 1 January 2014.
4.1.6 Miscellaneous
For each coming six-month period, the Ministry of Finance stipulates a late payment interest rate pursuant to Section 3 of Act of 17 December 1976 No. 100 relating to Late Payment Interest, etc. (the Late Payment Interest Act). The rate was equivalent to the Norges Bank key policy rate, with a surcharge of no less than 7 percentage points until 1 July 2013, and with a surcharge of no less than 8 percentage points after that date. On 26 June 2013, the late payment interest rate was fixed at 9.50 percent p.a., cf. Regulations of 26 June 2013 No. 755 relating to Late Payment Interest. At the same time, the Ministry of Finance stipulated a standard debt collection cost compensation amount of NOK 300. On 20 December 2013, the late payment interest rate was fixed at 9.50 percent p.a., cf. Regulations of 20 December 2013 No. 1586. At the same time, the Ministry of Finance stipulated a standard debt collection cost compensation amount of NOK 320.
4.1.7 Enacted regulations
The Ministry of Finance enacted 22 sets of financial market regulations in 2013:
Regulations of 8 January 2013 No. 15 relating to amendment of Regulations of 21 December 2011 No. 1467 supplementing the Securities Fund Act (the Securities Fund Regulations)
Regulations of 11 January 2013 No. 32 relating to amendment of Regulations of 17 December 2004 No. 1852 relating to the Implementation of the EEA Provisions on Adopted International Financial Reporting Standards
Regulations of 17 January 2013 No. 44 relating to amendment of Regulations of 16 December 1998 No. 1240 relating to the Annual Financial Statements, etc., of Banks, Financial Undertakings and their Parent Companies
Regulations of 20 February 2013 No. 215 relating to amendment of Regulations of 29 June 2007 No. 876 supplementing the Securities Trading Act (the Securities Trading Regulations)
Regulations of 22 March 2013 No. 330 relating to Computer Software Requirements and Reporting to the Norwegian Banks’ Guarantee Fund.
Regulations of 13 May 2013 No. 473 relating to amendment of Regulations of 29 June 2007 No. 876 supplementing the Securities Trading Act (the Securities Trading Regulations)
Regulations of 14 May 2013 No. 474 relating to amendment of Regulations of 29 June 2007 No. 876 supplementing the Securities Trading Act (the Securities Trading Regulations)
Regulations of 3 June 2013 No. 568 relating to transitional provisions supplementing Act of 9 April 2013 No. 15 relating to amendment of the Accounting Act and certain other statutes
Regulations of 21 June 2013 No. 722 relating to amendment of Regulations of 23 November 2007 No. 1318 relating to Estate Agency (documentation of bidding rounds)
Regulations of 26 June 2013 No. 755 relating to Late Payment Interest and Debt Collection Cost Compensation
Regulations of 28 June 2013 No. 805 relating to amendment of Regulations of 1 December 2004 No. 1558 relating to Bookkeeping
Regulations of 1 July 2013 No. 816 relating to amendment of Regulations of 14 December 2006 No. 1506 relating to Capital Requirements for Commercial Banks, Savings Banks, Financial Undertakings, Financial Group Holding Companies, Investment Firms and Securities Fund Management Companies, etc. (the Capital Requirements Regulations)
Regulations of 4 July 2013 No. 859 relating to amendment of Regulations of 29 June 2007 No. 875 relating to Regulated Markets (the Securities Exchange Regulations)
Regulations of 27 September 2013 No. 1134 relating to amendment of Regulations of 13 March 2009 No. 303 relating to the Committee for the Monitoring of Anti-Money Laundering Measures.
Regulations of 4 October 2013 No. 1170 relating to Counter-Cyclical Capital Buffers
Regulations of 13 October 2013 No. 1301 relating to amendment of Regulations of 14 December 2006 No. 1506 relating to Capital Requirements for Commercial Banks, Savings Banks, Financial Undertakings, Financial Group Holding Companies, Investment Firms and Securities Fund Management Companies, etc. (the Capital Requirements Regulations)
Regulations of 12 December 2013 No. 1440 relating to the Level of Counter-Cyclical Capital Buffers
Regulations of 18 December 2013 relating to repeal of Regulations of 20 December 1996 No. 1247 relating to Issue Price and Obligation to Report the Issuance of Bearer Bonds, etc.
Regulations of 19 December 2013 No. 1680 relating to amendment of Regulations of 16 December 1998 No. 1241 relating to the Annual Financial Statements, etc., of Insurance Companies, Regulations of 20 December 2011 No. 1457 relating to the Annual Financial Statements of Pension Undertakings and Regulations of 16 December 1998 No. 1240 relating to the Annual Financial Statements, etc., of Banks, Financial Undertakings and their Parent Companies
Regulations of 20 December 2013 No. 1586 relating to Late Payment Interest and Debt Collection Cost Compensation
Regulations of 20 December 2013 No. 1682 relating to Country-by-Country Reporting
Regulations of 20 December 2013 No. 1668 relating to amendment of Regulations of 17 December 2004 No. 1852 relating to the Implementation of the EEA Provisions on Adopted International Financial Reporting Standards
4.2 Administrative licences
On 5 March 2013, Gjensidige Arbejdsskadeforsikring AS and Gjensidige Forsikring ASA were granted a merger licence, with Gjensidige Forsikring ASA as the acquiring company. The licence is subject to conditions.
On 22 March 2013, Vestbo Finans AS was granted a licence to engage in financial activities pursuant to Section 3-3 of the Financial Institutions Act. At the same time, Vestlandske Housing Association was granted a licence to hold 100 percent of the shares of Vestbo Finans AS. The licence is subject to conditions.
On 18 April 2013, Sparebank 1 Kredittkort AS was granted a licence to engage in financial activities pursuant to Section 3-3 of the Financial Institutions Act. The licence is subject to conditions.
On 26 April 2013, Sparebanken Hedmark was granted a licence to expand its ownership stake of Sparebank 1 Oslo Akershus AS from 12 percent to 40.5 percent. The licence is subject to conditions.
On 26 April 2013, the Norwegian Confederation of Trade Unions (LO) was granted a licence to expand its ownership stake of Sparebank 1 Oslo Akershus AS from 5.9 percent to 19 percent. At the same time, LO and Affiliated Unions (Norwegian United Federation of Trade Unions, Norwegian Union of Industry and Energy Workers, Norwegian Civil Service Union, Norwegian Food and Allied Workers’ Union, Norwegian Seafarers’ Union, Norwegian Transport Workers’ Union, Norwegian Engineers’ and Managers’ Association, as well as the Norwegian Union of Postal and Communication Workers) were granted a licence to expand their aggregate ownership stake of Sparebank 1 Oslo Akershus AS from 8.6 percent to 28.4 percent.
On 30 April 2013, the Ministry of Finance approved the merger of Oslo Børs ASA and its Swedish subsidiary Burgundy AB; a Swedish regulated market licensed to operate a multilateral trading facility. At the same time, Oslo Børs ASA was granted a licence to engage in activities in Sweden via a branch. Finanstilsynet granted Oslo Børs ASA a licence to operate a multilateral trading facility, thus enabling Oslo Børs ASA to continue the operations of Burgundy AB following the merger.
On 2 May 2013, Bø Sparebank and Seljord Sparebank were granted a merger licence. Bø Sparebank acquired the savings bank activities of Seljord Sparebank, with the latter being closed down. Two savings bank foundations were established, which foundations hold equity capital certificates of the merged bank. The licence is subject to conditions.
On 8 May 2013, Sunndal Sparebank was granted a licence to issue transferable equity capital certificates. The licence is subject to conditions.
On 8 May 2013, Aasen Sparebank was granted a licence to issue transferable equity capital certificates. The licence is subject to conditions.
On 21 May 2013, OBOSBanken AS was granted a licence to engage in banking activities. OBOS Finans Holding AS, which is the owner of OBOS, was approved as 100 percent owner of OBOSBanken AS. The licence is subject to conditions.
On 10 June 2013, Hypo Næringskreditt was granted a licence to engage in credit activities. The licence was granted pursuant to Section 3-3 of the Financial Institutions Act. The licence is subject to conditions.
On 28 June 2013, Safe Deposit Bank of Norway AS was granted a licence to engage in commercial bank activities. The licence was granted pursuant to Section 8 of the Commercial Banks Act. At the same time, the Ministry of Finance approved the establishment of Safe Deposit Holding ASA as the parent company of a financial group, with Safe Deposit Bank of Norway AS as its wholly-owned subsidiary.
On 12 July 2013, Ria Financial Services Norway was granted a licence to engage in financial activities pursuant to Section 3-3 of the Financial Institutions Act. The licence is subject to conditions, and is restricted to currency exchange activities.
On 18 September 2013, Time sparebank was granted a licence to issue 1 million equity capital certificates with a nominal value of NOK 100 by conversion of its primary capital into equity capital. At the same time, a licence was granted for the establishment of Sparebankstiftelsen Time og Hå. The licence is subject to conditions.
On 2 October 2013, Nes Prestegjelds Sparebank and Hol Sparebank were granted a merger licence, with Nes Prestegjelds Sparebank as the acquiring bank. Two savings bank foundations were established, which foundations hold equity capital certificates of the merged bank. The bank has been named Nes Prestegjelds Sparebank. The licence is subject to conditions.
On 7 October, OBOS Factoring AS was granted a licence to engage in financial activities. The licence was granted pursuant to Section 3-3 of the Financial Institutions Act.
On 15 November 2013, Sparebanken Sør and Sparebanken Pluss were granted a licence to merge by the transfer of the assets and liabilities (operations) of Sparebanken Sør to Sparebanken Pluss, cf. Section 2c-2 of the Financial Institutions Act. It is intended for the operations of the merged bank to be continued under the name of Sparebanken Sør. A licence was granted, in connection with the said transfer, to issue equity capital certificates to Sparebankstiftelsen Sør in consideration for the equity capital of Sparebanken Sør. The licence also included the acquisition of significant ownership stakes in Sør Boligkreditt AS and Brage Finans AS, cf. Section 2-2, Sub-section 2, of the Financial Institutions Act, and the establishment and modification of a group structure, cf. Section 2a-3, Sub-section 2, and Section 2a-7, Sub-section 2, of the Financial Institutions Act. The licence is subject to conditions.
On 15 November 2013, Sparebank 1 NordVest was granted a licence to issue transferable equity capital certificates. The licence is subject to conditions, laid down pursuant to Section 2b of the Financial Institutions Act.
On 15 November 2013, Harstad sparebank was granted a licence to issue 1,500,000 equity capital certificates with a nominal value of NOK 100 by conversion of NOK 150 million of its primary capital into equity capital. At the same time, a licence was granted for the establishment of Sparebankstiftelsen Harstad Sparebank. The licence is subject to conditions.
On 25 November 2013, Helse Sør Øst RHF was granted a licence to establish a pension fund for health trusts in the capital region; Pensjonskassen for helseforetakene i hovedstadsområdet. The pension fund shall engage in group pension insurance activities classified as life insurance activities under Section 7-3 of the Insurance Activities Act of 10 June 2005. The licence is subject to conditions.
On 28 November 2013, Ly forsikring was granted a licence to engage in non-life insurance activities. The licence was granted subject to conditions. On 30 August 3013, Finanstilsynet confirmed that the conditions for activating the licence had been met, and that the licence could be activated.
On 20 December 2013, Komplett Bank ASA was granted a licence to engage in commercial bank activities. The licence was granted pursuant to Section 8 of the Commercial Banks Act. At the same time, Komplett AS was granted a licence to hold up to 20 percent of the shares of the bank. The licence is subject to conditions.
In 2013 Finanstilsynet received 19 applications for a licence to engage in payment activities. 16 of these licence applications were limited to money transfers. Two of the undertakings that submitted applications were granted a licence to provide money transfers, whilst two applications were withdrawn and twelve applications were rejected. Three of the applications remain under consideration. At the same time, Finanstilsynet received 11 applications for the renewal of limited licences granted in 2011. Three of these were granted, one was rejected and seven remain under consideration. In 2013, one licence to engage in payment activities was revoked due to inadequate reporting to Finanstilsynet, as well as the corporation failing to comply with its auditor appointment obligation.