After payment of contributions in 2024, the Resolution Fund was in compliance with the requirement of the European Commission that the Resolution Fund must have at its disposal funds corresponding to 1% of the covered deposits. This also means that, going forward, the institutions will only be required to make further contributions to the Resolution Fund if it is unable to keep up with developments in the covered deposits or otherwise fails to meet the target requirement. Finansiel Stabilitet will check once annually whether the Resolution Fund has at its disposal sufficient funds to meet the requirement and will inform the institutions if contributions are needed. It is expected that a small contribution will be needed to meet the target requirement in 2025.

With the Resolution Fund, Finansiel Stabilitet has at its disposal cash resources which may be used in case crisis management of a bank, mortgage credit institution or an investment company becomes necessary. The Resolution Fund may in such case be used to grant loans and guarantees, among other things. The Resolution Fund may also in special circumstances and within certain limits be used to cover losses directly when an institution needs crisis management, for instance to protect socially critical functions or to mitigate potential financial contagion in the situation at hand.

The Resolution Fund’s cash funds totalled DKK 8.8 billion at 31 December 2024. Finansiel Stabilitet is responsible for ensuring that the available financial means of the Resolution Fund are from time to time proportionate with the Resolution Fund’s potential liabilities. As is the case for the Deposit Guarantee Fund, an overall investment profile has been adopted that is based on investments being made in low-risk cash funds.

Finansiel Stabilitet may take resolution measures in accordance with the Act on Restructuring and Resolution of Certain Financial Enterprises if the following conditions are met: (1) the Danish FSA has informed Finansiel Stabilitet that the bank is failing or is likely to fail, (2) the Danish FSA has informed Finansiel Stabilitet that there is no prospect that other measures, including measures taken by the private sector or the Danish FSA, within an appropriate time frame would prevent a resolution of the enterprise, (3) Finansiel Stabilitet assesses that a resolution is necessary in the public interest.

When these conditions are met, Finansiel Stabilitet may e.g. assume control over the enterprise, effect a full or partial sale of the enterprise, transfer all or parts of the enterprise to a subsidiary of Finansiel Stabilitet (bridge institution or portfolio management company) or write down or convert the enterprise’s liabilities.

In connection with restructuring and resolution, losses are generally to be borne in accordance with the order of priority of creditors. Moreover, the principle applies that no creditor may be placed at a financial disadvantage relative to a bankruptcy process.

This is to be assessed in a subsequent independent valuation. If it is assessed that there are creditors who have been placed at a disadvantage, they will be entitled to compensation from the Resolution Fund.

Depositors may also be affected by restructuring and resolution measures, but the value of their deposits will never be less than the amount of coverage provided under the Deposit Guarantee Fund.

The Resolution Fund may be used to provide guarantees and loans etc. in connection with the use of restructuring or resolution measures. The Resolution Fund may also in special circumstances be used to cover a company’s losses when at least 8% of the company’s liabilities and own funds have been written down or converted. In such situation, the Resolution Fund may contribute assets equivalent to up to 5% of the enterprise’s liabilities and own funds. However, in the preparation of resolution plans, this option is not assumed to be used.

The legislative framework of the Resolution Fund and Finansiel Stabilitet’s restructuring and resolution activities is the Act on Restructuring and Resolution of Certain Financial Enterprises, see Consolidation Act no. 24 of 4 January 2019 and Executive Order no. 823 of 3 July 2015 on the Resolution Fund. In addition, executive orders have been issued on resolution planning and contingency resolution measures, see Executive Order no. 2018 of 26 October 2021, and on Finansiel Stabilitet’s use of resolution measures, see Executive Order no. 822 of 3 July 2015.

The Act on Restructuring and Resolution of Certain Financial Enterprises entered into force on 1 June 2015. The Act became effective for the Faroe Islands and Greenland on 1 January 2018 and 1 January 2020, respectively.

The rules implement Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 (BRRD) as amended by, among others, Directive 2019/879/EU of the European Parliament and of the Council of 20 May 2019 (BRRD II). With a view to achieving a uniform application of the rules, the European Commission issues delegated acts and implementing acts in this area.

On 11 August 2021, the Danish FSA decided that the Resolution Fund constitutes a public sector entity under Regulation (EU) no. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and that exposures to the Resolution Fund are assigned a 0 risk weighting pursuant to Article 116(4) of the Regulation.

 

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 18 to the financial statements.

The measurement of certain assets and liabilities is based on accounting estimates made by Management. Areas involving assumptions and estimates that are material to the financial statements include impairment losses on loans and advances and contingent assets, as described in more detail under accounting policies (note 1).

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. 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 risk of future losses as a result of the restructuring and resolution of failing banks resulting in losses on covered deposits.

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. Recent developments taken into account, the overall result is a small deficit.

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 general investment strategies of the two funds 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 2025 is determined for each of the three funds of the Finansiel Stabilitet Group.

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

For the Resolution Fund, a surplus of approximately DKK 150 million is expected, mainly arising from returns on the securities portfolio and interest on deposits with Danmarks Nationalbank. It should be noted that to build up the Resolution Fund in 2025, only a small contribution will be needed from the institutions that have an obligation to pay contributions.

For Activities handled on behalf of the government, a surplus of approximately 50 million is expected, mainly consisting of interest on deposits with Danmarks Nationalbank.

The outlook is subject to uncertainty.

Any change in interest rates could affect the results of all three funds. Despite an investment strategy based on low-risk assets, slightly higher interest rate risk implies a risk of fluctuations in the results of the Resolution Fund and the Deposit Guarantee Fund.

The results for 2025 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 results for 2025.

Finansiel Stabilitet structures the management of the Group and the performance of the Group’s activities in accordance with the special obligation imposed on Finansiel Stabilitet to support financial stability in Denmark.

Finansiel Stabilitet complies with the recommendations for exercising ownership and practising corporate governance in state-owned public companies, as described in the ownership policy of the Danish State published in 2015. In addition, Finansiel Stabilitet has chosen to comply with the recommendations of the Committee on Corporate Governance to the widest extent possible, even though Finansiel Stabilitet is not directly comprised by the recommendations. This annual report includes reporting on compliance with the Corporate Governance Recommendations, which were updated in December 2020 and are effective for financial years beginning on or after 1 January 2021.

At least once a year, the Board of Directors and the Management Board review the principles defined for the management of Finansiel Stabilitet and make ongoing adjustments as and when needed to ensure that the Company complies with good practice in the area.

The overall objectives are defined by the Ministry of Industry, Business and Financial Affairs. In light of the special tasks to be performed by Finansiel Stabilitet in accordance with the legislative framework, compliance with the Committee’s recommendations has in certain respects been adapted to Finansiel Stabilitet’s activities. With respect to the corporate governance recommendations in relation to risk management, the assessment was previously that these recommendations were of limited relevance as certain parts of the decisions on acceptance of risk, e.g. in connection with taking over assets, are not left to Finansiel Stabilitet’s Board of Directors and Management Board, as would normally be the case. In light of the current expansion of Finansiel Stabilitet's areas of activity, risk management will receive more attention going forward.

The Committee’s recommendations on the handling of takeover bids are not deemed to be relevant to Finansiel Stabilitet due to the Company’s status as an independent public company. Likewise, the Company has chosen not to comply with a few other recommendations as described in the sections below.

With respect to the Committee’s recommendations on a tax policy for the Company, the framework governing Finansiel Stabilitet's tax conduct is set out in a separate policy. The policy mainly concerns Finansiel Stabilitet’s handling of tax assets. In the interests of any creditors or other stakeholders, Finansiel Stabilitet is required to consider the value of any tax assets in connection with the resolution of failing institutions. At the same time, focus is on ensuring expedient handling from a social perspective.

The Ministry of Industry, Business and Financial Affairs on behalf of the Danish State is the Company’s sole owner. Finansiel Stabilitet maintains an ongoing dialogue with its owner to ensure that the Minister for Industry, Business and Financial Affairs receives relevant information on matters related to Finansiel Stabilitet. The relationship between Finansiel Stabilitet and the Ministry of Industry, Business and Financial Affairs is furthermore governed by a Strategic Governance Document for Finansiel Stabilitet, which also contains guidelines for exchange of information.

Finansiel Stabilitet publishes interim financial statements and releases quarterly announcements. The Company does not publish full interim financial statements for the first and third quarters. In this respect, Finansiel Stabilitet deviates from the recommendations of the Committee on Corporate Governance. It is assessed that the release of quarterly financial statements would not contribute material new information relative to the information already released through the quarterly announcements and other announcements.

Finansiel Stabilitet is subject to the rules applying to state-owned companies, which implies, among other things, that in key areas the Company is subject to the same requirements as listed companies. Announcements and other information from Finansiel Stabilitet and its subsidiaries are released through the Danish Business Authority and through the Company’s website, www.fs.dk. The website also provides information about the Company’s structure, activities, etc.

The general meeting is the Company’s supreme decision-making body. The Ministry of Industry, Business and Financial Affairs has same powers at general meetings as those awarded to shareholders pursuant to the Companies Act. Representatives of the Ministry of Industry, Business and Financial Affairs, the Board of Directors, the Management Board, the National Audit Office and the Company’s auditors attend the annual general meeting.

General meetings are open to the press. However, the Board of Directors of Finansiel Stabilitet may decide that a general meeting should be closed or partially closed to the press if motivated by considerations for the discharge of Finansiel Stabilitet’s objects, powers and responsibilities. Notices convening general meetings are published and distributed to the Minister for Industry, Business and Financial Affairs or his proxy not less than two weeks and not more than four weeks prior to the date of the general meeting.

Prior to election of members to the Board of Directors at the general meeting, information must be provided on the experience and professional background of the individual candidates. As the candidates are nominated by the Company’s sole owner, the Ministry of Industry, Business and Financial Affairs, it is assessed that there is no need to distribute information about the competences of the candidates together with the notice convening the general meeting. Finansiel Stabilitet thereby deviates from the recommendations of the Committee on Corporate Governance.

Finansiel Stabilitet has a two-tier management structure, consisting of the Board of Directors and the Management Board. The two bodies are mutually independent and have no overlapping members.

Finansiel Stabilitet’s subsidiaries are managed by independent management boards and boards of directors, which in part consist of Finansiel Stabilitet’s general management. This structure entails that Finansiel Stabilitet is represented on the boards of directors of all subsidiaries.

The Board of Directors is responsible for the overall management of Finansiel Stabilitet. The general guidelines for the work of the Board of Directors have been defined in the rules of procedure for the Board of Directors, which are revised on an ongoing basis and as required. The rules of procedure in force from time to time are available at Finansiel Stabilitet’s website, www.fs.dk. Due to the special objects and nature of Finansiel Stabilitet, the Board of Directors has flexible working methods and plans its work so as to accommodate the tasks at hand.

A total of 8 board meetings were held in 2024. A total of 10 board meetings were held in 2023, including 3 extraordinary board meetings

The Board of Directors is continuously updated on the Company’s situation. These updates take place through meetings as well as through written and oral reporting. The Board of Directors receives semi-annual reporting, including information about economic developments and the most important activities and transactions.

Finansiel Stabilitet deviates from the recommendations of the Committee on Corporate Governance with respect to board committees, as the Board of Directors has not to date found it necessary to set up an audit committee and, due to the close affiliation with the Minister for Industry, Business and Financial Affairs, has not found it necessary to set up remuneration and nomination committees.

The Board of Directors regularly and at least once a year evaluates the tasks and composition of the Board of Directors and the collaboration between the Board of Directors and the Management Board.

At 31 December 2024, the Board of Directors of Finansiel Stabilitet consisted of seven members.

The Minister for Industry, Business and Financial Affairs appoints the members of the Board of Directors, including the Chairman and the Deputy Chairman. The employees of neither Finansiel Stabilitet nor of Finansiel Stabilitet’s subsidiaries are entitled to elect members to the Board of Directors of Finansiel Stabilitet.

The members of the Board of Directors are elected for a term of one year, but are eligible for re-election. At the extraordinary general meeting held on 31 May 2024, Anne Louise Eberhard, Ulrik Rammeskow Bang-Pedersen, Ole Selch Bak, Morten Sommerfeldt, Jesper Rangvid, Ulrikke Ekelund and Gitte Lillelund Bech were re-elected to the Board of Directors.

Anne Louise Eberhard was re-elected as Chairman and Ole Selch Bak was re-elected as Deputy Chairman.

The Chairman of the Board of Directors may not undertake any offices on behalf of Finansiel Stabilitet which do not form a natural part of the office as chairman. However, if specifically required, the Chairman may perform tasks which he or she is requested to perform by and on behalf of the Board of Directors.

Candidates for the Board of Directors must possess relevant skills, and the Board of Directors as a whole must possess knowledge and experience of the key issues and challenges faced by Finansiel Stabilitet. Based on the Company’s business model and related risks, the Board of Directors annually identifies the areas which it deems the Management Board and the Board of Directors of Finansiel Stabilitet should have knowledge of and experience with. The circumstances relating to the Company’s management are adjusted as required on the basis of these assessments.

Information about the individual board members is provided in this Annual Report and on Finansiel Stabilitet’s website, www.fs.dk.

The Management Board consists of Karsten Biltoft, CEO. The Management Board along with Jens Verner Andersen (EVP Credit, Finance and IT), Attorney Carsten Oppermann (Deputy Director, Legal), Jeanette Bjørnlund Jensen (Head of Division, Credit, Research and Investment) and Karin Lykke Rasmussen (Head of the Management and Communication) constitute the general management of Finansiel Stabilitet.

The Board of Directors appoints the CEO, and the guidelines for the Management Board’s reporting and submission of decisions to the Board of Directors are laid down in instructions to the Management Board.

Each member of the Board of Directors receives a fixed annual remuneration, and the total annual emoluments paid to the Board of Directors are approved at the general meeting in connection with the approval of the annual report.

In the financial year 2024, remuneration paid to the Board of Directors amounted to DKK 1,425 thousand. The remuneration of the Board of Directors is disclosed on www.fs.dk.

The remuneration of the Management Board is determined by the Board of Directors, and in 2024 the remuneration of the Management Board consisted of a basic salary.

Finansiel Stabilitet has no pension obligations towards the Management Board. Members of the Management Board are not covered by bonus schemes and do not receive a separate fee for directorships held in subsidiaries. The remuneration of the Management Board is disclosed on www.fs.dk.

The terms of employment of the Management Board, including remuneration and severance terms, are deemed to be consistent with ordinary standards for a position of this nature and do not entail any special obligations on the part of the Company.

Finansiel Stabilitet complies with the remuneration recommendations of the Danish State’s ownership policy, and the Company’s remuneration policy reflects these rules. This includes paying competitive – but not top-bracket – salaries compared with peer companies in the public and private sectors.

Finansiel Stabilitet abides by legally binding agreements with employees entered into in connection with the takeover of failing banks.

The Board of Directors and the Management Board check the financial reporting, including compliance with relevant legislation and other regulations related thereto. Finansiel Stabilitet has set up the necessary internal controls to ensure that the Company’s financial reports give a true and fair view.

The Management Board maintains effective procedures to identify, monitor and report on risks, effective internal control procedures as well as satisfactory IT control and security measures. In order to prevent misstatements and irregularities in financial reporting, Finansiel Stabilitet assesses and adjusts its internal control and risk management systems on an ongoing basis.

Finansiel Stabilitet has established a whistleblower scheme for the Group, which is accessible via Finansiel Stabilitet’s website, www.fs.dk. The objective of the whistleblower scheme is to ensure expedient and confidential reporting of offences – or suspicion of offences – to an independent and autonomous unit, which can evaluate what measures should be taken. Under the whistleblower scheme, employees and other Finansiel Stabilitet stakeholders can report, anonymously or not, on any serious misconduct.

The activities of Finansiel Stabilitet are audited by the Auditor General of Denmark and a state-authorised public accountant. The state-authorised public accountant is appointed for a term of one year at the general meeting and must be certified by the Danish FSA.

Before nominating a candidate for appointment at the general meeting, the Board of Directors makes an assessment of the state-authorised public accountant’s independence, qualifications, etc.

The framework for the auditors’ duties, including their remuneration, audit and non-audit assignments are written into a service contract. EY was appointed auditors of the Finansiel Stabilitet Group’s activities in 2024.