Saturday 21 October 2017

'Too big to fail' banks in Denmark face tougher capital rules

Mette Fraende

DANSKE Bank will be among six banks which Denmark plans to classify as "too big to fail".

The decision means the banks could face tougher capital rules and increased supervision as the government seeks to reduce the risk of future financial crises. Danske operates here in Ireland but is regulated in Denmark.

A Danish government committee charged with looking into the banking sector said the country's so-called Systemically Important Financial Institutions (SIFIs) were Danske Bank, Jyske Bank, Nykredit, Nordea Bank Danmark, BRFkredit and Sydbank.

"These are institutions which are so large that they can impact the entire financial system and the economy, should they encounter problems," said Annette Vilhelmsen, minister for business and growth, whose department set up the committee.

According to the proposal, the total capital requirement for Danish SIFIs would be 15.5pc of risk-weighted assets, in line with requirements for SIFIs in neighbouring Sweden.

The six banks would also hold a crisis management buffer, amounting to 5pc of risk-weighted assets and which would be established over a three-year period from 2020. Proposals need to be approved by parliament to come into effect.

Irish Independent

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