|Subject:||Financial markets and financial stability; Financial stability|
|Year of publication:||2011|
|Date of publication:||05/26/2011|
The Danish banking institutions generally strengthened their capital bases in 2010. Overall the banking institutions' earnings improved a little, which is attributable to lower loan impairment charges, but the level remains high. The institutions should already now begin to prepare for the expiry of the government guarantees in 2012 and 2013. Danmarks Nationalbank's stress test shows that the Danish banking institutions overall and under the current capital requirements are capitalised to meet a more negative development than expected. Under the coming requirements, parts of the sector are insufficiently capitalised to withstand negative shocks to the economy. The mortgage-credit institutes' need to be able to issue bonds on an ongoing basis has increased substantially in recent years. Basel III and macroprudential regulation are addressed in two special-topic chapters. Basel III stipulates stronger capital and liquidity requirements. The transitional period will give the institutions time to make the necessary adjustments, but they should already now plan how to do so. Macroprudential regulation is intended to address systemic risks in the financial system in order to promote financial stability for the benefit of economic growth and welfare.