Result of EU-wide capital exercise

As part of the European recapitalisation plan of 26 October 2011, the European Banking Authority (EBA) has conducted a capital exercise of the largest European banks in cooperation with national authorities.

The purpose of the capital exercise is to ensure that participating banks have built up a buffer to reach a Core Tier 1 ratio of 9 per cent by end-June 2012, fully including sovereign debt exposures at market value. The buffer is intended to serve as a temporary boost to counter the ongoing financial market turmoil.

The capital exercise shows the following results for the four Danish participating banks by the end of 3rd quarter 2011:

  • Danske Bank: 13,84            
  • Jyske Bank: 12,34             
  • Nykredit: 14,04              
  • Sydbank: 12,78         

In addition, the capital exercise also shows that Danish banks are not exposed to vulnerable sovereign debt issuers to any significant extent, neither directly via sovereign bonds nor indirectly in the form of credit protection on sovereign exposures (CDS contracts).

In comparison, the preliminary results from October showed a small capital shortfall for Nykredit. The difference is primarily due to the fact that the EBA has adjusted the method for the application of the transitional rules from the current capital requirement rules. After the adjustment, which is particularly important for the calculation of risk weights on mortgage loans, the calculation method is further aligned with the Danish transitional rules. 

“The EBA capital exercise shows that the largest Danish banks are highly resilient towards credit losses from corporate sector and households, even under more adverse sovereign debt crisis conditions. Furthermore, the largest Danish banks have limited exposures towards countries with a strong impact from the euro crisis,” says FSA Director General Ulrik Nødgaard.  

  • See the individual results here