Stress test shows Danish banks have sufficient capital


The Danish central bank, also known as Danish Nationalbank, is seen in Copenhagen, January 22, 2015. REUTERS/Fabian Bimmer/File Photo

December 2, 2021

COPENHAGEN (Reuters) -Danish banks have sufficient capital to withstand a recession but a few systematically important banks are close to reaching safety buffers, results of a stress test by Denmark’s central bank showed on Thursday.

The stress test showed that the banks have sufficient capital to withstand a “severe recession scenario” the central bank said.

However, in the most severe stress test scenario, the systemic banks would fall about 13 billion Danish crowns ($1.98 billion) short of their buffer requirements, the bank said.

“It is important for banks to ensure during good times that they have a robust surplus relative to the minimum required eligible liabilities (MREL), a sufficiently diversified maturity profile of their MREL issuances and that the issuances have a long maturity,” the bank said.

($1 = 6.5701 Danish crowns)

(Reporting by Jacob Gronholt-PedersenEditing by John Stonestreet and David Goodman)

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