Finland: A Banking and Finance Overview

Current Relevant Topics

New financing opportunities are on the horizon in the Finnish real estate market. As part of an ongoing Finnish pension reform, in late 2025, the Finnish government published a draft proposal on regulatory revisions that would bring greater flexibility for Finnish pension insurance companies – one of Finland’s largest real estate investor groups – to utilise debt to finance their real estate investments. The possibilities of insurance companies, including pension insurance companies, to take on debt are generally limited. Although pension insurance companies have previously been permitted to take on debt under a limited and temporary exception to a general prohibition, the proposed amendments would expand these possibilities, for example by allowing debt financing also for commercial real estate investments. Further, individual subsidiaries would not face separate debt limits anymore, but instead, the combined debt of all the subsidiaries of a pension insurance company would be capped at a total of 10% of the sum of all investments and 50% of all real estate investments of the pension insurance parent company. At the time of writing, the legislative process is ongoing, and the amendments are envisaged to enter into force on 1 July 2027.

Green and sustainable financing continues to be a prominent topic in Finland as the climate crisis persists. Examples of products offered to clients include green loans, which are loans designated for environmentally sustainable purposes, and sustainability-linked loans, where interest rates are linked to the borrower’s achievement of certain sustainability targets. The Loan Market Association (LMA) continues to be active in this field, and published updated green, social and sustainability-linked loan principles and related guidance materials in 2025. These updates have also been reflected in the Finnish loan market. In 2025, the LMA also published a Transition Loans Guide, including transition loan principles in exposure draft form. On the regulatory side, all market participants continue to follow the so-called omnibus processes amending EU legislation. Changes have already been approved that reduce the scope of mandatory sustainability reporting under the Corporate Sustainability Reporting Directive and simplify taxonomy reporting, which will impact, for example, how data is available to banks. At the time of writing, a proposal to revise the Sustainable Finance Disclosure Regulation has been published.

Since 2023 in particular, offshore wind power has become a highly relevant topic within both the energy and financing sectors in Finland. In that year, the Finnish Ministry of Economic Affairs and Employment launched a legislative project to clarify the procedural framework for offshore wind power in Finland’s exclusive economic zone. On 1 January 2025, the Finnish Act on Offshore Wind Power entered into force. Under this act, suitable areas for offshore wind power in the exclusive economic zone may be opened for competitive tendering, which consists of three phases: (i) the Finnish government selecting the areas suitable for offshore wind power; (ii) the Finnish Energy Authority organising the competitive tendering; and (iii) granting the winner of the tendering the exclusive right to apply for an exploitation permit from the Finnish government to obtain a fixed-term right of use for a certain area for offshore wind power. The Finnish Energy Authority aims to organise the first tendering process during 2026 after the Finnish government has selected the relevant offshore wind power areas, which is expected to happen during the beginning of 2026. However, it remains to be seen how the financing and security packages for offshore wind power projects in the exclusive economic zone will be arranged, as the Finnish real estate system does not extend to the exclusive economic zone, and mortgages are therefore not available for financiers of offshore wind power.

Particular Legal Issues Related to the Finnish Banking and Finance Market

Financial assistance/corporate benefit

Like many other countries, Finland has rules regarding the prohibition of financial assistance and a requirement of corporate benefit. According to the Finnish Limited Liability Companies Act (statute 624/2006, as amended), a limited liability company shall not provide loans, assets or security for the purpose of a third party acquiring shares in the company or its parent company. Further, transactions which, in breach of the provisions of the Companies Act, reduce the assets of a company or increase its liabilities without any corporate benefit or a sound business reason for the company, constitute unlawful distribution of assets.

The concept of corporate benefit is always evaluated from the perspective of the company granting loans or security and the assessment is made on a case-by-case basis. Finnish company law does not recognise any group benefit. Finnish market practice in situations where the applicability of the financial assistance prohibition or the existence of a corporate benefit for the company is open to interpretation, is to include generic limitation language in the finance documents applying to both guarantees and security. There is, however, no Finnish case law on such limitation language, and therefore the significance a Finnish court would assign to such a clause cannot be fully determined.

Floating charges

In Finland, common security in financing transactions is a floating charge (also called a business mortgage). A Finnish floating charge covers all movable assets of a company, including all fixed assets (eg, machinery, equipment and trade marks), current assets (eg, raw materials, consumables and finished products and goods) and liquid assets (eg, cash at hand and receivables).

In an insolvency scenario, Finnish floating charges entitle the holder to priority over 50% of the enforcement proceeds of the relevant assets. The priority is limited to the nominal amount of the mortgage notes evidencing the floating charge plus interest and enforcement costs as determined in the mortgage note.

Some assets (such as shares and receivables) can be separately pledged in spite of the existence of a floating charge. If a separate pledge has been created over an asset, such asset is not covered by the floating charge. In addition, separate mortgages may be created over certain asset classes (eg, large vehicles and aircraft) under Finnish law. These assets are not covered by a floating charge even if such assets have not been separately mortgaged.

Guarantee as for one’s own debt

When a guarantee is required for payment obligations, in the Finnish market it is common to require and give such guarantee as a guarantee as for one’s own debt. This form of guarantee is covered by the Finnish Act on Guarantees and Third-Party Pledges (statute 361/1999, as amended). Under such guarantee, a guarantor is, as the name suggests, liable for the principal debt in the same manner as for its own debt. The creditor is entitled to demand payment from the guarantor immediately after the principal debt (in full or in part) has fallen due and payable. Contrary to a demand guarantee, a guarantee as for one’s own debt is related to the underlying debt obligation and subject to the same defences.

When entering into a guarantee as for one’s own debt, it is essential to identify the guarantee as such in the guarantee documentation. If nothing has been indicated in the relevant agreement, a guarantee is taken to create a secondary guarantee which does not place the creditor in as strong a position as a guarantee as for one’s own debt would.