Featured Product

    Danish FSA Assesses Lending Practices, Designates Danish SIFIs

    November 04, 2022

    The Danish Financial Supervisory Authority (Danish FSA) has identified one real estate credit company that has insufficient creditworthiness assessment process and updates list of systemically important financial institutions (SIFIs) in Denmark.

    Danish FSA must annually set a threshold value for the size of an institution's balance sheet, which institutions must exceed before they can be designated as SIFIs. The limit was DKK 3 billion in 2021. However, Danish FSA informs that it has set the limit at DKK 3.02 billion in 2022 and this affects the designation of Danish SIFIs. As a result, the Danish SIFIs are now Danske Bank A/S, Nykredit Realkredit A/S, Nordea Kredit Realkreditaktieselskab, Jyske Bank A/S, Sydbank A/S, DLR Kredit A/S, Spar Nord Bank A/S, and A/S Arbejdernes Landsbank. The Faroese SIFI groups designated as SIFIs are P/F BankNordik and Betri Banki P/F while the the Bank of Greenland continues to be the designated SIFI in Greenland. Danish FSA informed that the new SIFI designation model is per January 01, 2022 and has set out the category that each SIFI belongs to.

    Danish FSA conducted an assessment to investigate whether three property credit companies comply with the rules on carrying out a creditworthiness assessment of the borrower. The assessment revealed that twoDanish FSA  of the three real estate credit companies that have been investigated have business practices that ensure that a thorough creditworthiness assessment of the individual consumer is carried out. However, one entity known as Ejendomskreditselskabet Fairkredit A/S has received an injunction for not sufficiently ensuring that the creditworthiness assessment is based on adequate and documented information about the individual consumer's finances. Danish FSA found that Fairkredit does not sufficiently ensure that the creditworthiness assessment is based on adequate and documented information about the specific borrower's expenses, as the company does not obtain documentation for other budget items such as utility expenses, but primarily uses estimates to document the borrower's stated expenses. Use of estimates from price comparison sites as a basis for calculating the borrower's available amount entails a risk that the calculated available amount does not give a true picture of the individual borrower's financial situation. Thus, Danish FSA has order Fairkredit to rectify these issues and carry out a creditworthiness assessment in accordance with the order on good practice for housing credit §§ 19-20 cf. § 8a, subsection 2, in the Act on property credit companies. The deadline for documenting compliance with the order is January 13, 2023. 

     

    Related Links (in Danish)

     

    Keywords: Europe, Denmark, Banking, SIFI, Regulatory Capital, Systemic Risk, Credit Risk, Basel, Lending, Loan Origination, Creditworthiness Assessment, Real Estate Lending, Danish FSA

    Featured Experts
    Related Articles
    News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News
    News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News
    News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News
    News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News
    News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News
    News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News
    News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News
    News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793