Search
On 10 October 2008 the Danish Parliament adopted the Danish Act on Financial Stability. The Act was drawn up in the light of the international financial crisis and is based on an agreement between the Danish government, a broad section of the parliamentary parties, and the Private Contingency Association which represents a very large portion of the Danish banking industry. With the adoption of the Act a guarantee scheme has been established by which, until September 30, 2010, the Danish central government will provide an unlimited guarantee for all deposits in the 133 banks joining the scheme. These 133 banks comprise by far the majority of the Danish banking industry. The Act also guarantees coverage for other claims of unsecured creditors, should a bank be forced to shut down. For banks which have chosen not to join the scheme, the ordinary statutory depositor guarantee of EUR 50,000 (approx. DKK 375,000) per depositor will apply. Effective September 30, 2010, the amount will double to EUR 100,000 (approx. DKK 750,000). The Act involves establishing a winding-up company operated by central government to settle the activities in any ailing banks covered by the scheme and to secure the claims of depositors and other creditors. Banks covered by the guarantee scheme are to contribute to the scheme with up to DKK 35 bn. in guarantee commission and as first loss cover for losses that may result in the winding up company. The Danish Act on Financial Stability has been approved by the European Commission. In connection with this approval, the European Commission stipulated a number of requirements to ensure that the scheme falls within the framework of EU regulations on state aid. For example, these requirements set a limit for the growth of the Danish banks covered by the scheme over the two years the guarantee scheme is to run. The Danish FSA will be responsible for monitoring the compliance with these requirements. The Act also lays down more detailed regulation on the amount of risk the individual banks covered by the guarantee scheme are allowed to take on. The Danish FSA is responsible for supervising that this regulation is observed. Finally, further to the Act, the Danish FSA has issued a ban on short-selling shares in Danish listed banks. Follow the link to read more about initiatives to ensure financial stability in Denmark: The Danish Financial Supervisory Authority's interpretation of 17 October 2008 on the capital requirement treatment etc of exposures to banks covered by the guarantee scheme set up by The Danish Act on Financial Stability
On 10 October 2008 the Danish Parliament adopted the Danish Act on Financial Stability. The Act was drawn up in the light of the international financial crisis and is based on an agreement between the Danish government, a broad section of the parliamentary parties, and the Private Contingency Association which represents a very large portion of the Danish banking industry.
With the adoption of the Act a guarantee scheme has been established by which, until September 30, 2010, the Danish central government will provide an unlimited guarantee for all deposits in the 133 banks joining the scheme. These 133 banks comprise by far the majority of the Danish banking industry. The Act also guarantees coverage for other claims of unsecured creditors, should a bank be forced to shut down. For banks which have chosen not to join the scheme, the ordinary statutory depositor guarantee of EUR 50,000 (approx. DKK 375,000) per depositor will apply. Effective September 30, 2010, the amount will double to EUR 100,000 (approx. DKK 750,000).
The Act involves establishing a winding-up company operated by central government to settle the activities in any ailing banks covered by the scheme and to secure the claims of depositors and other creditors. Banks covered by the guarantee scheme are to contribute to the scheme with up to DKK 35 bn. in guarantee commission and as first loss cover for losses that may result in the winding up company.
The Danish Act on Financial Stability has been approved by the European Commission. In connection with this approval, the European Commission stipulated a number of requirements to ensure that the scheme falls within the framework of EU regulations on state aid. For example, these requirements set a limit for the growth of the Danish banks covered by the scheme over the two years the guarantee scheme is to run. The Danish FSA will be responsible for monitoring the compliance with these requirements.
The Act also lays down more detailed regulation on the amount of risk the individual banks covered by the guarantee scheme are allowed to take on. The Danish FSA is responsible for supervising that this regulation is observed.
Finally, further to the Act, the Danish FSA has issued a ban on short-selling shares in Danish listed banks.
Created 21.05.2010 Edited 04.02.2009