Most banks have put the financial crisis behind them. The banks have in general high excess liquidity cover, impairment charges are falling and capitalisation has increased. The increased capitalisation should be viewed in the light of higher capital requirements for banks after the financial crisis. A robust and well-capitalised banking sector is the precondition for financial stability and hence a stable economic development.
In recent years, bank earnings have been under pressure due to low demand for new loans and low interest rates. Negative interest rates could add to this pressure. The banks are adapting to a situation with negative interest rates, and deposit rates are falling.
That is the assessment of Danmarks Nationalbank in Financial stability, 1st Half 2015, which is published today.
Danmarks Nationalbank's latest stress test of the banks' capitalisation shows that the largest banks have substantial excess capital adequacy in relation to the minimum requirements in 2017, even in the most severe stress test scenario.
Capital requirements will increase in the coming years up to 2019 when the new capital adequacy rules are to be fully phased-in. In addition, a number of comparable countries outside the banking union have chosen to introduce higher capital requirements than the fully phased-in requirements in Denmark. This may lead to market expectations for the Danish banks to be better capitalised. Hence it is important that the largest banks begin to prepare for a new market standard with higher capital requirements.
Enquiries can be directed to Julie Holm Simonsen on tel. +45 3363 6022.