Denmark orders banks to raise credit card risk weightings (updated)

Laan & Spar Bank A/S

31/07/2014 15:41

(Adds quotes from FSA official, details on impact on four 
banks) 
    COPENHAGEN, July 31 (Reuters) - Denmark's financial 
regulator has told the country's top two banks to assign tougher 
risk measures to retail credit cards and overdrafts but said the 
change would have a minimal impact on their capital adequacy 
ratios, an official said on Thursday. 
    The Financial Services Authority made the assessment for 
Danske Bank  DANSKE.CO  and Jyske Bank  JYSK.CO  as well as 
smaller banks, Laan og Spar Bank  LASP.CO  and Nykredit Bank. 
    Per Lamberth, deputy director of banking at the Financial 
Services Authority, said the current risk weightings did not 
reflect the volatility of certain parts of their assets. 
    "They (the four banks) have been using a special low risk 
weighting for certain types of exposures to retail customers," 
said Lamberth, naming the type as "qualifying retail revolving 
exposure". 
    "One of the requirements of using this risk weight is that 
these exposures have lower volatility than others. We found that 
they couldn't demonstrate that." 
    For Danske Bank this means an increase in its risk-weighted 
assets by 2.7 billion Danish crowns ($485 million), but its 
capital solvency ratio remains the same at 18.1 percent of  
risk-weighted assets as of the end of March 2014, the FSA said 
in its individual assessment of the impact on the banks. 
    Jyske Bank's capital ratio falls to 16 percent from 16.2 
percent, with risk-weighted assets rising by 1.1 billion crowns. 
    Nykredit's risk-weighted assets rise by 1.3 billion crowns, 
with its capital ratio unchanged at 18.3 percent, while Laan og 
Spar's ratio falls to 16.4 percent from 18.3 percent on a 623 
million crown rise in risk-weighted assets. 
 ($1=5.5707 Danish crowns) 
 
 (Reporting by Sabina Zawadzki and Stine Jacobsen, Editing by 
Mia Shanley and Greg Mahlich) 
 ((sabina.zawadzki@thomsonreuters.com)(+45 33 96 96 49, +45 20 
54 86 88)) 
 
Keywords: DENMARK BANKING/REGULATIONS