Introduction

Chairman

Finansiel Stabilitet is an institution that is critical to society in that it, together with the financial sector, the Danish FSA and Danmark’s Nationalbank, contributes to ensuring financial stability in Denmark. If a financial institution is failing, Finansiel Stabilitet is ready to take it over and ensure that businesses and individuals still have access to accounts and payment infrastructure.

Although we have a strong financial sector in Denmark, in the spring of 2023, we witnessed the collapse of several international banks, including Silicon Valley Bank and First Republic Bank in the USA and Credit Suisse in Switzerland. This clearly demonstrated the need for a reliable and effective restructuring and resolution plan for failing financial institutions. When confidence in an institution is lost, prompt action is required to ensure the continuation of critical infrastructure and customers’ access to accounts and financial services.

Finansiel Stabilitet’s contingency set-up for crisis management requires preparation and practice. We are therefore continually updating our contingency set-up, and Finansiel Stabilitet is coordinating the preparation of a major exercise in 2024 concerning the financial authorities’ contingency set-up for crisis management in the eight Nordic and Baltic countries.

International knowledge sharing and coordination are important elements in this respect. In the spring of 2023, the European Commission presented a proposal to amend the legal framework for crisis management, which in several areas corresponds to Danish practice. Finansiel Stabilitet is leading the Danish delegation in the current EU Council working group negotiations on the proposal, one aim of which is for the member countries’ deposit guarantee schemes to take on a more prominent role. Furthermore, it is proposed that it should be more common for failing financial institutions in the EU to be wound up rather than for them to enter into bankruptcy proceedings. This would benefit customers of such institutions as well as financial stability in general.

The financial sector saves up contingency funds through the Deposit Guarantee Fund and the Resolution Fund, both managed by Finansiel Stabilitet. Our crisis management of financial institutions in Denmark is based on the fundamental principles of fair implementation, safeguarding the public interest and minimising taxpayers’ losses. This strengthens confidence in the financial system.

In 2023, the last liability claim arising from the financial crisis was settled, and in 2024 Finansiel Stabilitet expects to be able to wind up the last remaining subsidiaries of banks taken over by Finansiel Stabilitet in connection with the financial crisis.

Finansiel Stabilitet is ready to take on other relevant government tasks in addition to its core tasks and to contribute to value creation in our society. We already solve several tasks on behalf of the government where our expertise is useful, such as the issuance of government guarantees for loans to install heat pumps and to buy property in rural areas. In the autumn of 2023, the government furthermore resolved that Finansiel Stabilitet will be responsible for the liquidation of assets acquired by the state from industries related to mink industries.

In December 2023, the Council of the European Union and the European Parliament reached a preliminary agreement on a new Insurance Recovery and Resolution Directive (“IRRD”). The Directive aims to protect taxpayers’ money and minimise the impact on the economy and the financial system in a crisis management situation. Finansiel Stabilitet is making preparations to take on this task when the Directive is adopted and is implemented in Denmark.

Our core task of ensuring a financial contingency set-up requires that the organisation’s expertise and contingency set-up are maintained and continually developed, and we must remain able to attract, develop and retain talent to solve our tasks. We must be able to quickly scale up the contingency set-up and address the complexity of the next crisis, which we do not know the scope of in advance. Therefore, international sharing of experience, cooperation on contingency plans and crisis exercises are essential, and the new tasks contribute to maintaining and enhancing our expertise.

On behalf of the Board of Directors, I would like to extend my sincere thanks to our skilled employees and Management, our owner, business partners and the financial institutions for their competent and good collaboration in 2023.