- Project Runeberg -  Finland : its public and private economy /
202

(1902) [MARC] Author: Niels Christian Frederiksen
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But it is permissible for banks to issue debentures
for long periods when guaranteed by the deposit of
mortgages or government or municipal bonds under
public control. The legal existence of these banks for
the purpose of issuing such debentures is permitted for
a longer period, and is no more, as formerly, limited to
a period of ten years. A bank which desires such
permission to issue debentures must have a capital of
at least one million marks. For other banks such
a capital is no longer necessary; and smaller banks
are, therefore, found nowadays. Finnish citizens only
can be directors of joint-stock companies and take
part in private banking enterprises with joint
responsibility. The banks are not allowed to place
money in manufacturing or agricultural industries, or
in real estate other than their own building properties.
They must publish monthly statements, and are subject
to public control by a particular commissioner
nominated by the government. If, in addition to the
reserve, a quarter of their capital is lost, they must
close their doors; if one-tenth is lost, the shareholders
must immediately make it good if they wish
to avoid closing and winding-up.

The “Föreningsbanken i Finland” or Union Bank,
the first private bank in Finland, was formed in
1862. The earliest plan was to form a bank in the
special interest of agriculture; it was to co-operate
with the Hypotheksföreningen, established at the same
time, by placing its debentures, and for this purpose was
always to hold a very considerable amount of the
latter’s paper. It was, however, soon seen that such
a special purpose was not in the interest of the bank
and the shareholders; it might amount to a
compulsory tying up of capital in an unremunerative
manner. This idea was, therefore, soon given up.

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