OP Financial Group postpones OP cooperative banks’ profit distribution, i.e. the payment of interest on Profit Shares for the financial year 2019, from June until October 2020 in line with the recommendations issued by the European Central Bank (ECB) and the Financial Supervisory Authority (FIN-FSA).
On 27 March 2020, the ECB issued a recommendation asking banks to postpone profit distribution until at least 1 October 2020. The FIN-FSA issued a similar recommendation to banks under its supervision on 28 March 2020 and refined it on 30 March 2020. The purpose of this recommendation is to safeguard the ability of banks to support the real economy by providing funding to businesses and households to alleviate the effects of the economic crisis caused by the corona pandemic.
“We want to comply with the ECB recommendation and assume our responsibility as Finland’s largest financial services group. OP Financial Group is one of Europe’s strongest banks in terms of capital adequacy, and our capacity to withstand crises is high. Now it’s important to focus on ensuring that we can help Finnish businesses and households in the best possible way to get through this exceptional crisis,” says Vesa Aho, CFO, OP Financial Group.
Profit Shares are long-term equity contributions made by OP cooperative banks’ owner-customers to their local OP cooperative banks. A return target is set annually on Profit Shares. For 2019, this target was 3.25%. Interest on Profit Shares is paid annually out of the bank's distributable surplus under the Co-operatives Act. Interest payable on Profit Shares for the financial year 2019 is estimated to total EUR 97 million.
Profit Shares increase OP Financial Group’s lending capacity and help it execute its mission: promoting the sustainable prosperity, security and wellbeing of its owner-customers and operating region.