By Gustav Sandstrom
A Danish government committee Thursday said six of the country's
banks should be classified "too big to fail" and held to higher
capital and liquidity standards to prevent a repeat of the 2008
financial crisis.
The banks that should be designated as systemically important
financial institutions, or SIFIs, are Danske Bank A/S (DANSKE.KO),
the Danish unit of Sweden's Nordea AB (NDA.SK), Nykredit A/S, Jyske
Bank A/S (JYSK.KO), BRFkredit and Sydbank A/S (SYDB.KO), the SIFI
Committee said.
Besides additional capital and liquidity requirements, the
committee also recommends enhanced supervision of SIFIs and the
development of recovery and resolution plans, corporate governance
and crisis management, it said.
The panel proposed a "significant" phasing-in period for the
rules, prompted by new EU legislation on capital requirements for
lenders and investment firms.
Some recommendations, including the SIFI requirements, might be
implemented already next year, but the introduction of a crisis
management regime will have to await adoption of similar rules in
the EU in order to ensure compatibility with international
regulation, the committee said.
Many European banks have lobbied for regulators not to implement
new SIFI rules too fast.
The committee has turned over its proposal to the Danish
minister for business and growth, Annette Vilhelmsen.
"The government generally supports the recommendations from the
committee," she said in a statement. "These institutions are so
large that it can affect the entire financial system and the
economy as a whole if they get into trouble."
Several smaller Danish banks, including Amagerbanken and
Fjordbank Mors, failed in the wake of the 2008 financial crisis
amid poor funding conditions and risky loans to the country's real
estate and agricultural sectors.
The committee includes members from government ministries,
Denmark's central bank and financial supervisory authority, and
independent experts.
Political negotiations are likely to start in the months ahead,
after a public consultation.
Write to Gustav Sandstrom at gustav.sandstrom@dowjones.com
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