Report on possible Danish participation in the Banking Union

Published 11-05-2015

In February 2014 the Danish government set up an interministerial working group with a view to assess whether it is in the overall interest of Denmark to participate in the Banking Union. The working group has now finalised its report.

Following this, the Minister for Economic Affairs and the Interior, Morten Østergaard, and the Minister for Business and Growth, Henrik Sass Larsen, comments:

“Basically, the Banking Union and the strengthened financial regulation are about creating a good framework for a healthy banking sector in the EU and the euro area countries following the experiences from the financial crisis. In several European countries the tax payers were first in line when the bill was to be paid following failing banks. This must not happen again.”

“The Banking Union basically builds on the model we have developed ourselves in Denmark: If a bank fails it is the bank itself and the creditors of the bank who pay the bill.”

“We are a small country with a large banking sector and participation in the Banking Union can anchor an already strong supervisory and resolution regime in a strong European framework.” 

“The Banking Union can contribute to financial and economic stability which will benefit Denmark too”.

“On this background, we find that, in principle, it would be an advantage for Denmark to participate in the Banking Union. We will take a final decision regarding Danish participation when we have seen how the Banking Union works in practice and when the necessary clarifications have been made”.

In the report it is assessed that altogether much speaks in favour of participation in the Banking Union as being in the interest of Denmark.

The report points out that Danish participation in the Banking Union could enhance the possibilities to ensure Danish interests in the EU, especially in relation to legislative developments in the financial services area. In addition, participation could give access to a larger “common insurance” for the Danish credit institution which would be relevant in extraordinary situations where large losses are incurred in the banking sector. The report furthermore points to the fact that a more uniform practice of supervision and resolution within the Banking Union can strengthen competition in the Internal Market.

At the same time, additional clarification in some areas would be desirable.

In some areas clarifications will take place as experiences with the Banking Union are gained. This applies for instance to questions in relation to the practice and decision-making process of the ECB and the Single Resolution Board. In addition, greater clarity could be gained in relation to the handling of the economic challenges, especially in relation to the public finances, of certain European countries, which can affect the health of the banks in the countries concerned.

In other areas, clarity should be obtained through further discussions with the ECB, the Single Resolution Board and the Commission. This is particularly the case for the treatment of the Danish mortgage credit system and the Governing Council’s right to bypass the Supervisory Board when it comes to decisions on macroprudential tools in Denmark. The needed clarifications concerning the treatment of the Danish mortgage credit sys-tem, macroprudential decisions etc. within the Banking Union should be provided before deciding on Danish participation in the Banking Union.

Parallel to the preparation of the report, the Ministry of Justice has assessed that by participating in the Banking Union powers vested in the authorities of the Realm under the Constitutional act will not be delegated to international authorities as specified in Article 20 of the Constitutional Act of Denmark.


Ministry of Business and Growth: Søren Møller Nielsen, +45 22 44 50 60,

This document is an English translation of the original Danish text. In the event of discrepancies between the original Danish text and the English translation, the Danish text shall prevail.

Summary of the Report