Financial Regulation | Landmark court ruling paves the way for banking M&A in Norway

A landmark judgement from the EFTA Court now allows individuals and companies to obtain authorisation to own more than 25% of Norwegian banks and insurance companies. This marks the end of Norwegian authorities' long-standing resistance to "private banking", and the judgement will require a significantly more flexible approach to ownership structures in the banking and insurance sector from supervisory authorities, which in turn opens the door for increased M&A activity in Norway's financial sector going forward.

The key consequences of the judgement are:

Norwegian authorities are obliged to comply with the EFTA Court’s judgement, and changes in administrative practice can and should take place immediately.
Private investors can no longer be denied the right to acquire more than 25% of a bank or insurance company based on assessments that are not directly linked to the specific acquirer’s suitability. The relevant directives exhaustively specify which criteria must be used for suitability assessments, and Norwegian authorities cannot consider other criteria beyond these.
Authorisation will no longer be required to acquire 25% of a bank or insurance company if one already has authorisation to own 20% or more. The EFTA Court establishes that only the directives’ thresholds of 10%, 20%, 30% (or 33.34%) and 50% apply.
The Financial Supervisory Authority’s established practice of requiring new applications when acquirers make subsequent acquisitions within the same qualifying holding interval will likely have to end. This means that authorisation to acquire, for example, 20% or more of a bank provides access to trade freely in the interval between 20% and 30% (subject to any restrictions in other regulatory frameworks, such as stock exchange rules, etc.).
Parties who have been refused authorisation for acquisitions based on unlawful administrative practice may have grounds for claims against the State as a result.

With this judgement, the EFTA Court definitively rejects Norwegian authorities’ arguments to justify the administrative practice that has now been found to breach EEA law. Norwegian ownership restriction rules and associated administrative practices have long been controversial, and it may be food for thought that Norwegian authorities did not change their practices during the ESA process. At the same time, it is clear that Norwegian authorities have for decades believed that dispersed ownership in banks and insurance companies has strengthened the robustness of Norwegian financial markets, making it important for authorities to obtain final legal clarification from the EFTA Court on this matter.

The ownership restriction rules are now being phased out of Norwegian financial market legislation at a time when the industry is more thoroughly regulated than ever as a result of joint international regulatory efforts following the financial crisis. The EFTA Court’s judgement will hopefully mark the starting point for a renewed assessment of how ownership structures in Norway’s financial industry are viewed, which could help create a more modern and forward-looking financial industry in Norway over time.

More about the judgement:

On 30 September 2025, in an infringement case between the EFTA Surveillance Authority (ESA) and Norway, the EFTA Court ruled that Norway failed to fulfil its EEA obligations under the Capital Requirements Directive for banks and other credit institutions (CRD IV) and Solvency II (concerning requirements for insurance undertakings) by maintaining restrictive ownership rules for these institutions. The case concerned both administrative practice related to ownership restrictions in banks and insurance companies, and statutory criteria for suitability assessments in the Financial Institutions Act Section 6-3.

ESA argued that Norway’s administrative practice appeared twofold: first, that a proposed acquirer wishing to increase their shareholding to 25% or more must notify and seek approval from authorities, even when the acquirer already has authorisation to own more than 20%. Second, a 20-25% ownership threshold is used as a “starting point” or “main rule” in the assessment.

Norway acknowledged the existence of the administrative practice and confirmed during oral hearings that the practice involves notification obligations beyond or between the thresholds set out in the directives. Norway further confirmed that the assessment’s starting point is based on their ownership diversification practice, which involves “strong caution” against anyone owning more than 20-25% of a financial institution.

The EFTA Court concluded that Norway’s administrative practice of requiring approval for ownership of 25% or more, with a presumption against approval, violates the directives. The Court stated that assessment criteria in CRD IV Article 23(1) and Solvency II Article 59(1) are exhaustive and thus exclude additional national criteria.

The EFTA Court also found that by maintaining Section 6-3, second paragraph of the Financial Institutions Act, particularly the first sentence and provisions (c) and (d), Norway had failed to fulfil its obligations under CRD IV and Solvency II. This provision was amended in line with directive requirements with effect from 1 July 2024, but only after ESA’s deadline for compliance with their reasoned opinion had expired. Therefore, ESA did not withdraw this part of the case, even though Norwegian regulations had subsequently been adapted to directive requirements.