Ownership restrictions in Norwegian banks and insurance companies under threat

EFTA Surveillance Authority has confirmed its opinion that the Norwegian ownership restrictions is a breach of fundamental EU rights, the freedom of establishment and free movement of capital. The Norwegian government has until mid-June 2019 to adjust current legislation and practice, or face legal action.

In a letter dated 10 April 2019 ESA has confirmed its opinion that the current wording and practice under the Financial Undertakings Act requiring (i) any new bank or insurance company to facilitate that new investors are given 75% of the capital, and (ii) no shareholder of a bank of insurance company may hold more than 20-25% of shares in such companies, constitute breach of Article 31 (freedom of establishment) and article 40 (free movement of capital) of the EEA Agreement.

Read the “Letter of formal notice to Norway concerning the authorisation of financial undertakings in Norway“.

It should be noted that ESA as early as 2001 concluded that the statutory 10% limit for non-licensable acquisitions of banks and insurance companies in Norway constituted a breach of the EEA Agreement. See the press release from the EFTA Surveillance Authority.

In essence, ESA argue that the EU-based suitability assessment may not be used as an argument for having limits that cannot be construed as being based on suitability.

The Norwegian government has two months to respond in order to avoid ESA bringing the matter before the EFTA Court.