Danish opposition calls for bank resizing scheme

danish-kronerAn opposition majority in Denmark is pursuing legislation which would reduce the size of the country’s largest banks.

The Danish Social Democratic Party has recommended that Nordea Danmark, FIH Erhvervsbank, Nykredit Bank, Sydbank, Jyske Bank and Danske Bank should all be split up into smaller, independent institutions. The proposal has been applauded by the majority of the opposition.

“The banks have reached a size which means that if one of them folds it would have serious consequences. It is therefore necessary to split them up into smaller, independent units,” said Moretn Bodskov, the Social Democratic Finance Spokesman.

Ole Sohn, The Socialist People’s Party’s Finance Spokesman, has also advocated a less risky overhaul of the country’s banking system, while Kristian Thulsesen Dahl, the Danish People’s Party’s Parliamentary Group Chairman, said that his group’s priority was to ensure that normal customers are not held accountable for risks taken by the financial sector. “I would be prepared to regulate the size of banks, but provided that conditions allow equal competition with foreign competitors,” said Dahl.

The Danish banks have so far rejected the initiative. Peter Schultze, CEO for Nordea Danmark, said the proposal was built upon a misconception that, when it comes to banks, greater size leads to greater risk. Klaus Willerslev-Olsen, the Danish Bankers Association Deputy Director, added that the scheme would not reduce any potential problems.

Brian Mikkelsen, The Minister for Open are and Trade, said the proposals reflect the scepticism of the Social Democrats towards big business and that such a move would destroy Danish banking in international competition, reports Politiken.

“I am quite prepared to work for a reasonable regulation of the banks. But this has to take place in an international context and I do not see a limit on bank sizes,” said Mikkelsen.

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