Frontpage News 2014 Stress test: Robus...

Stress test: Robust Danish banking sector

10 December 2014

Today’s stress test from the National Bank of Denmark confirms the image of a solid Danish banking sector. This is great news for the financial stability, and at the same time, a good prerequisite for economic growth.
The National Bank of Denmark assesses that the Danish banks are able to withstand tough economic shocks. This is evident from the half-yearly stress test of the Danish banks, which have been published by the National Bank of Denmark today.
“First and foremost, the stress test confirms that the Danish banks are extremely well-capitalised and have built up a financial cushion in case of crises in the future,” says Louise C. Mogensen, Deputy Chief Executive at the Danish Bankers Association.
Moreover, the National Bank of Denmark points out that the Danish banks should increase their earnings, which are pressured by low earnings and increased competition. The earnings should, among other things, work as protection against possible losses.
“The banks’ earnings are still at a low level, but show signs of improvement. The low level of interest limits the banks’ opportunities to earn money,” Louise C. Mogensen explains.
Furthermore, the National Bank of Denmark recommends that Denmark joins the European Banking Union in 2015.
“The Danish Bankers Association is generally in favour of the intentions of the Banking Union, as it aims to reduce the risk of financial instability. However, the Danish Bankers Association recommends that we await further development in order to decide whether Denmark should join the Banking Union. There are several elements of uncertainty. Therefore, we recommend that the elements of uncertainty are continually assessed, so we can assess whether it is in the Danish interest to participate in the Banking Union within a fairly foreseeable future. It will of course be included whether the Danish banks will have any additional requirements imposed by not participating in the Banking Union, as stated by the National Bank of Denmark,” says Louise C. Mogensen.
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