FINLAND Trends and Developments Contributed by: Maria Lehtimäki, Waselius
obscure into something relatively simple, stand - ardised and transparent. The Legislative Status Quo in Finland Today, the EU Securitisation Regulation and its delegated acts and regulatory guidelines issued by pan-European authorities are the main rules that govern securitisation in Finland. Although it is undisputed that securitisation is a specific process that serves a specific purpose, with the EU Securitisation Regulation as the main legal source of regulation, the questions relating to the effectiveness of asset transfers and security take are based on traditional Finnish legislation governing asset transfers and security take gen - erally, and general insolvency legislation forms the parameters and perimeters for bankruptcy remote structures and transactions. The concept and definition of “true sale” remains mostly a topic of academic legal doctrine, which is both theoretical and complicated with some of it being outdated as well as conflicting. Further uncertainties that arise from general company law and tax law – which are suitable for most economic activity, but not specifically designed to cater for securitisation – create additional pressures that drives= many structures to other EU jurisdictions that are more familiar to inves - tors and have normative certainty. Of course, as described above, this has been the case for the entire history of securitisation in Finland and has not prevented market partici - pants from successfully completing many secu - ritisation transactions that have withstood the economic cycles of boom and bust. The govern - ment bodies have time and time again conclud - ed that the legislative status quo is acceptable. Nonetheless, the lack of a clear and suitable leg - islative framework creates high transaction costs and execution uncertainty. Seeing the practical hurdles and finding ways to cross those hurdles,
it is easy to say that the further development of the Finnish securitisation market would be served by specific legislation that addresses the issues that the EU Securitisation Regulation is unable to address due to a lack of competency of the European Union under the EU constitutive treaties. Competition From Covered Bonds In the early 2000s, the first iteration of the Finnish Act on Mortgage Banks was introduced to regu - late the issuance of covered bonds. Although covered bonds do not offer the same capital management opportunities as securitisation, as the cover pool remains on the bank’s bal - ance sheet, their clarity and ease, and conse - quently relatively low transaction costs, have made covered bonds the go-to instrument for mortgage banks. This trend continues and Fin - land, along with the other Nordic countries, is a strong covered bonds jurisdiction. Nonethe - less, the ongoing tightening of prudential and regulatory requirements has already led to some Nordic banks tapping the securitisation market and further forays are expected. Current State and Future Direction of the Market Nowadays, unsecured consumer loans and trade receivables are typically securitised pri - vately, and the transaction structure is typically less complicated than in public deals. The public deal space currently consists of auto ABS trans - actions. The prevalence of auto ABS is explained by the availability of good quality homogenous assets and the fact that there is already estab - lished industry precedent paving the way for new issuances. The availability and quality of assets is explained by geopolitical circumstanc - es – Finland is a sparsely populated country with a large land mass and personal transportation is a necessity in most parts of the country. Finns
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