Europe’s financial problems lead to wave of deposits in Norway
Financial sector analysts in Norway warn that the increasing use of Norwegian banks for safehaven deposits suggests the EU’s banks are heading for a major crash.
According to Statistics Norway, the amount of foreign deposits jumped by 20% to more than NOK870bn (€112bn) betweeen the second and third quarters this year.
Knut Anton Mork, chief economist at Handelsbanken, is quoted by Dagens Næringsliv as saying this flood of money threatens the stability of Norwegian banks.
“The situation is not good. This is evidence that a major banking crisis threatens. What is surprising is that it has not already happened.”
Harald Magnus Andreassen, chief economist at First Securities, added that it is easy to understand why foreign investors would deposit money in Norway considering the trouble their own banks may be in.
“It’s attractive to put money in Norwegian banks when the alternative is banks in most other European countries. This is understandable given both the Norwegian economy and the Norwegian government’s ability to take care of the banks should it become necessary. This is good for the banks because it means they can access cheap money. But it also points to the opposite, that others are in trouble.”
Norway’s banking rules provide deposit gurantees to customers up to the value of NOK1m (€130,000) per bank. The equivalent guarantee in the EU is €100,000.