Financial stability - Banks should keep their powder dry

Analysis - December 2020 - No. 28

Authors Danmarks Nationalbank
Subject Financial stability; Financial risks; Financial regulation; Macroprudential policy
Type Analysis
Year 2020
Published 10 December 2020
So far, the credit institutions have come through the crisis relatively unscathed. With a number of relief packages, the central government has provided a cushion under large parts of the Danish corporate sector. However, credit institutions must prepare for the end of the schemes. In line with the government relief packages being phased out, the credit institutions will have to expect higher losses and a deterioration in the credit quality of their lending. The situation remains highly uncertain, and the credit institutions should be cautious when planning dividend payments.