Today, the Danish Minister for Business and Growth, Henrik Sass Larsen, concluded a political agreement with broad political support, which tightens requirements for Danish banks and mortgage-credit institutions and establishes a governing board in the Danish FSA. The agreement is concluded between the Danish Government and the political parties which have supported the previous bank packages (Venstre, Dansk Folkeparti, Liberal Alliance and Det Konservative Folkeparti).
Minister of Business and Growth, Henrik Sass Larsen:
The agreement consists of three main elements. Firstly, special requirements for SIFIs are introduced. These institutions are so large that, if they encounter difficulty, this could have far-reaching negative consequences for households, enterprises and the national economy in general. In the future these institutions must therefore be better capitalised than other institutions in order to reduce the risk that they get into difficulties.
Secondly, requirements for Danish banks and mortgage-credit institutions are tightened, among other things in the form of stricter requirements to the institutions’ capital and liquidity so that they can better resist future crises.
Thirdly, the Danish FSA’s supervisory efforts are strengthened by establishing a governing board. The board will take over the present tasks of the Financial Council and will also be providing technical, organisational and managerial assistance to the management team of the Danish FSA. In this way, the management of the organization of supervisory activities is strengthened.
With the agreement – and based on the most recent financial statements – seven institutions are expected to be identified as SIFIs: Danske Bank, Nykredit, Nordea Bank Danmark, Jyske Bank, BRFkredit, Sydbank and DLR Kredit.
To follow up on the agreement, the Government will as soon as possible introduce the legislation required to amend Denmark’s financial regulations. The SIFI regulations will take effect from 1 January 2015. The legislation transposing CRD4, etc., into Danish law is expected to come into force in the first quarter of 2014.