Treasury Today Country Profiles in association with Citi


Recognised by the World Economic Forum as having a well-managed economic policy, first class public institutions, and a private sector that adapts quickly to new technology and innovation, Finland is one of the world’s most competitive economies. Home to mobile telephone giant Nokia, Finland also has an advanced telecommunications sector, which contributes significantly to the country’s economy, together with the more traditional timber and metals industries.

Map of Finland

Key facts

Official country name:
Republic of Finland
Euro (EUR)
Finnish and Swedish
Capital city and financial centre:
Other major cities:
Espoo, Tampere, Vantaa, Turku, Oulu
Time zone:
UTC +2
5,259,250 (July 2011 est)
Population growth rate:
0.075% (2011 est)
GDP per capita (US dollar equivalent):
$35,400 (2010 est)
GDP real growth rate:
0.3% (2010 est)
Government type:
Head of State:
President Tarja Halonen
Political leader:
Prime Minister Jyrki Katainen
Top export partners:
Germany, Sweden, Russia, US, Netherlands, UK and China
Top import partners:
Russia, Germany, Sweden, Netherlands, China and France

Economic overview

Finland joined the EU in 1995 and became the first – and only – Nordic country to adopt the euro as its official currency in 1999. Operating a largely export-driven economy, Finnish GDP tumbled by an unprecedented 8.2% in 2009, which was one of the steepest declines seen in the Eurozone.

Strikes closed major Finnish ports in the first quarter of 2010, hampering growth at the beginning of the year, but despite this setback, the country achieved growth of 3.1% across the year as global demand resurfaced. During 2011, the country’s GDP is predicted to grow by around 3.8%, according to the OECD and the Bank of Finland. In addition, the Bank expects that, “The gradual pick-up of international investment demand will underpin growth in Finnish exports geared towards capital goods. Output growth in 2011 will also be boosted by strong domestic demand.”

Finland entered the global financial crisis with solid government finances, which kept the deficit below 3% of GDP. Moreover, Finland’s banks had built up significant capital buffers pre-crisis, which meant that the financial sector came out of the turmoil relatively unscathed. The country’s labour market also saw a limited impact from the crisis, with unemployment peaking at 8.4% in 2010.

Nevertheless, Finland faces challenges around its labour force as around 5% of workers are due to retire between 2010-20, presenting a threat to the country’s competitiveness. The OECD warns that, “As ageing weighs on public finances, structural reforms to contain public spending and promote labour force participation, together with further reforms of the pension system, remain essential to support medium-term growth and fiscal sustainability.”

The banking sector

As at 31st December 2010, there were 313 banks operating in Finland:

  • 14 commercial banks.

  • 213 member cooperative banks of the OP-Pohjola Group.

  • 38 local cooperative banks.

  • 34 savings banks (28 banks and six limited companies).

  • 14 deposit-taking branches of foreign credit institutions.

OP-Pohjola Group, Nordea Bank Finland (a subsidiary of the Nordea Group) and Sampo Bank (a subsidiary of Danske Bank) are the three largest banking groups in Finland. The majority of the Finnish banking market is under foreign ownership.

Suomen Pankki, the Bank of Finland, is Finland’s central bank, national monetary authority and member of the European System of central banks and the Eurosystem. In addition to ensuring price stability in order to maintain a sound economy, the Bank of Finland is involved in banking operations, and the maintenance of currency supply. The Bank of Finland is obliged to redeem markka (the country’s former currency) banknotes and coins until 29th February 2012.

Both the financial and insurance sectors are overseen by Finanssivalvonta (Fiva), or the Financial Supervisory Authority (FIN-FSA). According to the FIN-FSA, the results of the EU-wide 2011 stress test confirmed the resilience of the largest banking groups operating in Finland and do not indicate a need for specific measures to safeguard the stability of the country’s banking sector.

Payments and clearing

System Clearing type Transaction types Value dates Times
TARGET2 RTGS High-value and urgent domestic and cross-border payments in EUR Settlement on same-day basis with immediate finality

Cut-off for customer payments = 18:00 EET

Cut-off for interbank payments = 19:00 EET

POPS* Gross and bilateral net settlement, depending on payment value Domestic cheques, bank drafts and credit transfers Same day, end-of-day finality 08:00 – 16:30 EET
PMJ** Bilateral net settlement Interbank retail payment system for non-urgent, low-value credit transfers, direct debits and card payments Settlement up to two days depending on payment type

Cut-off for customer payments = 16:00 EET

Cut-off for interbank payments = 16:30 EET

*POPS will be replaced by EBA clearing in the near future.
**Due to SEPA migration, PMJ will not be used for clearing credit transfers after 2011 and will be replaced by EBA STEP2.

The vast majority of payment traffic in Finland is electronic as the Finnish banks have offered electronic services since the early 1990s. Finland is a SEPA pioneer and is leading the market in terms of SEPA payment volumes.

  • Credit transfers are popular in the country, with less than 2.5% being paper-based.

  • Payment cards are prevalent in Finland. In fact, cards have replaced cheques and cash, to a large extent, within the B2C space.

  • Offline and online debit cards are available. Finnish banks offer so-called ‘combination cards’ which feature both debit and credit facilities. National bank cards and ATM cards were due to be replaced with SEPA cards by the end of 2010, however it is estimated that circa 1.1m of these cards are still in circulation.

  • Direct debits are mainly used in the B2C space, rather than B2B. The domestic direct debit scheme will be replaced by SEPA Direct Debit in due course.

  • E-invoicing is growing in popularity in Finland, with a 71% increase in usage of the Finvoice standard during 2010. State institutions are now obliged to receive only e-invoices from their suppliers.

  • Cheques are very rarely used and banks no longer issue cheque books to personal or corporate clients.

Investment options

  • Current accounts are interest bearing in Finland.

  • Certificates of deposit are traditionally the most popular short-term investment instrument. They are offered by most commercial banks but minimum investment amounts do apply.

  • Time deposits, although less popular than CDs, are frequently used by smaller companies. The majority of time deposits have maturities of under one month.

  • Treasury bills are also not as commonly used as CDs, as the yields tend to be lower. Issued in euro and US dollars, Finnish t-bills have maturities ranging from one day to 12 months.

  • Commercial paper has become more popular in recent years.

  • Money market funds are widely available to corporate investors of all sizes, and are often used by SMEs.

  • Repurchase agreements are common in the interbank market.

  • There are no foreign exchange controls in Finland.

  • The corporate tax rate is 26% (2011 figure).

  • Finland levies no withholding tax on interest. Royalties paid to a non-resident incur a withholding tax rate of 28%, unless they are exempt under the EC interest and royalties directive, or there is a tax treaty in place. Where dividends are paid to a Finnish company, they are exempt from withholding tax. The rate is typically 28% for dividends paid to non-resident companies.

  • Transfer pricing.

    Finland has required transfer pricing documentation since 2007, and subsidiaries are required to adopt the arm’s length principle.

  • Thin capitalisation.

    The capital structure of a company must be commercially viable to allow interest deduction but otherwise the country imposes no set thin capitalisation rules.