Faroese banks designated as systemically important

Betri Banki and Føroya Banki have been classified as systemically important financial institutions (SIFI) by the Faroese Financial Supervisory Authority, the authority announced on Thursday.

A bank is designated as a SIFI if its collapse would pose a significant risk to the broader financial system and society. SIFI banks face stricter oversight than other financial institutions.

Last year, Betri Banki’s total assets equalled 49% of the Faroe Islands’ gross domestic product, while Føroya Banki’s reached 53.4%. Betri Banki held 44.2% of all loans and 44.4% of all deposits in the Faroese banking sector, with Føroya Banki accounting for 41.6% and 39.8%, respectively.

The Financial Supervisory Authority reviews the SIFI status of Faroese banks annually.