The description of the principal risks affecting Finansiel Stabilitet is based on three segments, as described below. For further information on risks and risk management, see note 20 to the financial statements.

Risks under Activities handled on behalf of the government may be subdivided into Bank Package activities and Other areas.

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

Other areas handled on behalf of the government are operated for the account and risk of the government.

Significant risks under the Deposit Guarantee Fund relate to the resolution of activities taken over by Finansiel Stabilitet under Bank Package III 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 under FS Finans III-IV A/S 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, additional losses have been recorded under Bank Package III relating to the resolution of FS Finans IV A/S. It is considered unlikely that losses will occur in relation to FS Finans III A/S before the company’s expected liquidation in 2024.

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. Including the most recent results, the status of the Resolution Fund is close to break-even, i.e. the Resolution Fund has realised neither a gain nor a loss on the ownership.

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 balance sheet date that have a significant effect on the Group’s financial position.

The outlook for 2024 is determined for each of the three funds of the Finansiel Stabilitet Group.

For the Resolution Fund, a surplus of approx. DKK 1.3 billion is expected, mainly arising from the expected payments from the institutions that have an obligation to pay contributions to the Resolution Fund.

For the Deposit Guarantee Fund, a surplus of approximately DKK 200 million is expected, mainly arising from returns on the securities portfolio.

For Activities handled on behalf of the government, a surplus of approximately 100 million is expected, mainly consisting of interest on deposits with Danmarks Nationalbank.

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.

The results for 2024 of Activities handled on behalf of the government also remain subject to uncertainty as the Bank Package activities may have a potential impact on operations due to value adjustment of assets, if the resolution of these either exceeds or falls short of the carrying amounts.

Furthermore, the geopolitical uncertainty may impact economic developments and, consequently, the Company’s result for 2024.