Denmark’s biggest banks would be among the hardest bit by the Basel Committee’s proposed changes to risk-weighted asset calculations. Data collected by The Banker reveals their current capital buffers.
The capital requirements of Denmark’s five biggest lenders could increase by up to 39% if the Basel Committee follows through on proposed changes, according to a recent government report.
The study, which looked at the four biggest Danish-headquartered banks and the local subsidiary of Sweden’s Nordea, concluded that if Basel introduces a so-called capital floor to curb the use of internal risk models, their collective Tier 1 capital requirements would increase by up to DKr92bn ($14.53bn).
The country’s bank sector would be disproportionately hit because standardised models do not take into account Denmark’s ultra-low-risk mortgage market.
Using current models, the country’s biggest lender, Danske Bank, has a flush risk-weighted capital ratio of 22.1% and $22bn of Tier 1 capital. It is followed by Nykredit which has $9.9bn after increasing its capital base by 5.2% since 2015. Jyske Bank, which sits in third place, saw its Tier 1 capital surge 7% to reach $4.6bn. Meanwhile Sydbank’s capital base remained steady at $1.6bn.
All data sourced from www.thebankerdatabase.com
