Oma Säästöpankki faces financial troubles amid manipulation scandal in Seinäjoki
Oma Säästöpankki, a publicly traded bank based in Seinäjoki, Finland, is facing deepening financial troubles. The bank issued a negative profit warning on Wednesday, indicating a much more pessimistic outlook than previously forecasted in April. Expected earnings are projected to decline by several tens of millions of euros compared to earlier estimates.
The bank now estimates its pre-tax comparable earnings for the year will fall between €80 million and €100 million, down from earlier predictions of €120 million to €140 million. In 2023, the bank reported a profit of €143.6 million, which means, if forecasts hold, earnings could drop by over €50 million year-on-year.
The bank’s issues began to surface in the spring, when it was revealed that internal manipulation of loan data had occurred. Following this, Finland’s National Bureau of Investigation initiated a preliminary investigation into alleged securities crimes at the request of the Financial Supervisory Authority. Additionally, Pasi Turtio, the deputy CEO, resigned in the spring, and CEO Pasi Sydänlakka was dismissed in June. The bank has also requested an investigation into its former CEO.
These serious changes stem from fraudulent practices within the bank’s leadership, where executives allegedly manipulated the lending process for personal gain. The risky loans primarily targeted the real estate sector across various locations in Finland, which appear to be leading the bank into substantial losses. The bank has anticipated credit losses reaching €19.5 million. On the Helsinki Stock Exchange, the bank’s shares reacted modestly to the news, dropping slightly over one percent. The company is set to announce its second-quarter earnings next week.