Struggling Danish banks receive more time to raise capital

14 May 2013

Two Danish banks currently in breach of the country's solvency rules will be given more time to raise capital and avert failure after the financial regulator eased its resolution practices.

Bloomberg reports head of banking at the Financial Supervisory Authority (FSA) Anders Balling said the regulator will give the banks the time they need to rebuild their capital buffers.

When the banking crisis was at its worst in Denmark two years ago, the FSA only gave lenders 48 hours to find investors before they were closed down. At least 12 Danish banks have been shut down by the FSA since 2008 for breaching solvency rules.

Mr Balling told the news reporter: "We have moved away from an either-or model. We can see the benefits of a gradual approach. This is also part of the thinking in the new European capital requirement rules."

Denmark is the hardest hit Scandinavian country in the eurozone and is striving to emerge from the 2008 property market collapse and regional bank failures.

By Gary Cooper

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