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OP Corporate Bank

OP Corporate Bank plc is the senior unsecured bond issuing entity of OP Financial Group.

OP Corporate Bank plc is the central bank and a wholly owned subsidiary of OP Cooperative. In its wholesale funding, OP Corporate Bank aims at broad diversification, according to which it diversifies risks by maturity, counterparty, product and market area. OP Corporate Bank has two debt programmes:

  • EUR 20-billion Euro Medium Term Note (EMTN) programme for the issuance of long-term debt instruments

  • EUR 18-billion Euro Commercial Paper (ECP) programme for the issuance of short-term debt instruments.

When assessing OP Corporate Bank's credit rating, credit rating agencies take account of entire OP Financial Group's financial standing, because they monitor the Group as a single entity and OP Cooperative and Group Member Credit Institutions (including OP Corporate Bank) are liable for each other's debts and commitments.

OP Cooperative and OP Corporate Bank plc

OP Financial Group ("Group") is the largest financial services group in Finland, offering banking, insurance and wealth management services for over four million customers.

The Group began its operations in its present form as the amalgamation of the Member Cooperative Banks as provided for in the Act on Cooperative Banks and Other Credit Institutions in the Form of a Cooperative (laki osuuspankeista ja muista osuuskuntamuotoisista luottolaitoksista 1504/2001)("Cooperative Bank Act") in 1997.

In accordance with the Act on Deposit Bank Amalgamations (Laki talletuspankkien yhteenliittymästä 599/2010) (the "Amalgamations Act"), OP Financial Group comprises: (a) OP Cooperative as OP Financial Group's central institution; (b) the companies belonging to the consolidation groups of OP Cooperative; and (c) the Member Credit Institutions of OP Cooperative, which consist of OP Corporate Bank plc as the central bank of OP Financial Group, OP Mortgage Bank (OP-Asuntoluottopankki Oyj in Finnish), Helsinki Area Cooperative Bank, OP Card Company Plc and member cooperative banks (together the "Member Credit Institutions"). The Group is supervised on a consolidated basis. The Member Credit Institutions and the Central Cooperative are liable for each other's debts and commitments.

The member cooperative banks are independent, local deposit banks that are engaged in retail banking. OP Cooperative is the Group's strategic owner institution, which is owned by the member cooperative banks. As a central institution, it is in charge of Group steering and control. Product and service development as well as support functions have been centralised in OP Cooperative's subsidiary OP-Services Ltd.

OP Corporate Bank plc, incorporated as a public limited company in Finland, is a wholly owned subsidiary of OP Cooperative and it was established in 1902. OP Corporate Bank serves as the central bank of the Group being responsible for the Group's liquidity management and international operations.

In addition to the Act on Credit Institutions (laki luottolaitostoiminnasta 121/2007, as amended), OP Corporate Bank operates pursuant to the Companies Act (osakeyhtiölaki 624/2006, as amended) and the Act on Investment Firms (laki sijoituspalveluyrityksistä 9227/2007, as amended).

Joint liability

Joint liability (the "Liability") within OP Financial Group is based on the Amalgamations Act. OP Cooperative and its Member Credit Institutions are liable for each other's debts and commitments in accordance with the Amalgamations Act.

In accordance with the Amalgamations Act OP Cooperative is responsible for issuing guidelines on risk management, reliable administration, internal surveillance and guidelines for the application of coherent accounting principles in compiling the consolidated financial statements of OP Financial Group to the Member Credit Institutions, with the aim of ensuring their liquidity and capital adequacy. OP Cooperative also supervises the Member Credit Institutions' compliance with the applicable rules and regulations in respect of their financial position, any provisions issued by the relevant supervising authorities, their statutes and articles of associations.

The obligation to issue guidelines and exercise supervision does not however give OP Cooperative the power to determine the business operations of the Member Credit Institutions or the Member Cooperative Banks. Each Member Credit Institution carries on its business independently within the scope of its own resources.

On the basis of this Liability, OP Cooperative must pay to each Member Credit Institution an amount that is necessary in order to prevent such Member Credit Institution's liquidation. OP Cooperative is responsible for the payments of any debts of a Member Credit Institution that cannot be paid using such Member Credit Institution's own funds.

A Member Credit Institution must pay to OP Cooperative a proportionate share of the amount which OP Cooperative has paid either to another Member Credit Institution as part of the support action described above, or to a creditor of such Member Credit Institution as payment of a due debt for which the creditor has not received payment from his debtor. Furthermore, upon the insolvency of OP Cooperative a Member Credit Institution has an unlimited liability to pay the debts of OP Cooperative as set out in Chapter 15 of the Cooperative Bank Act.

Each Member Credit Institution's liability, for the amount which OP Cooperative has paid on behalf of one Member Credit Institution to its creditors, is divided between the Member Credit Institutions in proportion to their last confirmed balance sheet totals.

If the funds of any Member Credit Institution fall below the minimum set out in the Act on Credit Institutions or the Amalgamations Act, as the case may be, OP Cooperative is entitled to receive credit from the other Member Credit Institutions by collecting from such other Member Credit Institutions additional repayable payments to be used to support actions to prevent liquidation of the Member Credit Institution. The annual aggregate amount of the payments collected from the Member Credit Institutions on this basis may in each accounting period be a maximum amount of five thousandths of the last confirmed balance sheet total of each Member Credit Institution.

A creditor who has not received payment from a Member Credit Institution on a due receivable (principal debt) may demand payment from OP Cooperative, when the principal debt falls due.

Under the regulation applied to crisis resolution of credit institutions and investment firms, the resolution authority is authorised to intervene in the terms and conditions of investment products issued by a bank in a way that affects an investor's position. The EU’s Single Resolution Board (“SRB”) based in Brussels is OP Financial Group's resolution authority. The SRB has confirmed a resolution strategy for OP Financial Group whereby the resolution measures would apply to OP Corporate Bank acting as a Single Point of Entry.

The resolution authority may, pursuant to Article 21 of the Single Resolution Mechanism Regulation ((EU) No 806/2014, “SRMR”) and subject to the priority order of claims laid down in Section 4a of the Finnish Credit Institutions Act (610/2014), decide to write down the nominal value of debt instruments issued by OP Corporate Bank in order to cover the losses of OP Corporate Bank as the issuer. The resolution authority may, pursuant to Section 27a of the Finnish Act on the Amalgamation of Deposit Banks (599/2010, the “Amalgamation Act”), in the same manner decide to write down the nominal value of instruments in order to cover the losses of other credit institutions or other undertakings belonging to the same amalgamation as OP Corporate Bank if OP Financial Group is entered into resolution pursuant to the SRMR and the Amalgamation Act. The amount of write-down will be converted into lower-ranking financial instruments of OP Corporate Bank or its successor and assigned to the holder of the instrument.

If OP Corporate Bank is entered into resolution pursuant to the SRMR together with one or more other credit institutions or other undertakings belonging to the same amalgamation, the resolution authority may, pursuant to Article 24 of the SRMR, make a decision to merge one or more such credit institutions or other undertakings with OP Corporate Bank, in which case the nominal value of instruments can be written down to cover losses of all merging credit institutions and other undertakings. The amount of the write-down will be converted into lower-ranking financial instruments of OP Corporate Bank or a new credit institution resulting from the merger and assigned to the holder of the instrument.

The resolution authority may also, pursuant to Chapter 12 Section 1 of the Finnish Resolution Act (1194/2014), decide to amend or alter the maturity of instruments, interest payable under instruments and the date on which interest becomes payable and to suspend payments for a predetermined period of time, if OP Financial Group is entered into resolution.