The principal risks affecting Finansiel Stabilitet concern the uncertainty related to the resolution of activities taken over by Finansiel Stabilitet under Bank Packages I-IV and the risk of losses on contributed capital from the Resolution Fund in connection with the restructuring and resolution of failing banks etc.

To reflect the financial distribution between Bank Package activities, the Deposit Guarantee Fund and the Resolution Fund, Finansiel Stabilitet’s risks are similarly distributed among the three segments.

The principal risks affecting the different segments are described below. For further information on risks and risk management, see note 23 to the financial statements.

Risks under Bank Package activities are to a considerable extent influenced by the special tasks involved in taking over and resolving failing banks under the Bank Packages. As the customer exposures and lawsuits have been significantly reduced, the risk of losses is considered to be relatively low.

Significant risks under the Deposit Guarantee Fund relate to the resolution of activities that Finansiel Stabilitet has taken over under Bank Packages III-IV and the risk of future losses as a result of the restructuring and resolution of failing banks resulting in losses on covered deposits.

If the resolution of activities of FS Finans I-IV produces a loss which had not been anticipated at the takeover date, such loss will have to be covered by the Depositor and Investor Guarantee Scheme. Based on the preliminary resolution, the only additional losses recorded under Bank Package III relate to the resolution of FS Finans IV A/S.

Moreover, the investment of the Deposit Guarantee Fund’s investable funds will be subject to risk, depending on the chosen investment profile. The Act on a Depositor and Investor Guarantee Scheme stipulates that the investable funds of the Deposit Guarantee Fund must be invested in low-risk assets. Each year, Finansiel Stabilitet’s Board of Directors defines the investment strategy for the Resolution Fund. The investment strategy must be determined so as to ensure that the available financial means of the Deposit Guarantee Fund are from time to time proportionate with the Deposit Guarantee Fund’s potential liabilities.

Significant risks under the Resolution Fund relate to losses in connection with the restructuring or resolution of failing institutions in which the Resolution Fund has injected capital.

Currently, this risk is reflected in the ownership of FS Finans V A/S and FS Finans VI A/S, as any impairment of the remaining assets and lack of profitability will have an adverse effect on the Resolution Fund. Following recent developments, the result is close to 0.

Moreover, going forward, the investment of the Resolution Fund’s investable funds will be subject to the same risk factors as those of the Deposit Guarantee Fund, as the investment strategies are identical.

No events have occurred after the year end that have a significant effect on the Group’s financial position.

The outlook for 2023 is determined for each of the three funds of the Finansiel Stabilitet Group. For the Resolution Fund, a surplus of approx. DKK 1 billion is expected, corresponding to the expected payments from the institutions that have an obligation to pay contributions to the Resolution Fund. The Bank Package activities and the Deposit Guarantee Fund are expected to post a small surplus.

The outlook is subject to considerable uncertainty.

Any changes in interest rates could affect the results of all three funds, but for the Resolution Fund and the Deposit Guarantee Fund in particular, the interest risk implies a risk of significant fluctuations in results.

Furthermore, the result of the Bank Package activities for 2023 remains subject to uncertainty. Accordingly, the guidance provided above does not include any potential effect on operations of value adjustments of assets, should the resolution results prove either higher or lower than the carrying amounts.

Furthermore, the continuing war in Ukraine and the geopolitical uncertainty may impact economic developments and, consequently, the Company’s result for 2023. In light of the recent financial market performance, Finansiel Stabilitet closely monitors developments and regularly discusses the situation with the Ministry of Industry, Business and Financial Affairs, Danmarks Nationalbank and the Danish FSA.