The Danish Executive Order on Capital Adequacy Annex 3 and 7 and the Danish Executive Order on Large Exposures section 5 - The capital requirement treatment etc of exposures to banks covered by the guarantee scheme set up by The Danish Act on Financial Stability

The Danish Financial Supervisory Authority's interpretation of 17 October 2008. The interpretation was presented to the Financial Business Council on 20 October 2008.

Exposures to Danish banks which are covered by the guarantee scheme that was set up pursuant to the Danish Act no 1003 of 10 October 2008 on Financial Stability shall be treated as exposures guaranteed by the central government of Denmark until the termination of the guarantee scheme.

Concerning exposures with a residual maturity extending the date of the termination of the guarantee scheme, adjustments for maturity mismatch shall be calculated according to the provisions in Annex 7 to the Danish Executive Order on Capital Adequacy, cf Executive Order  no 10302 of  21 December 2007.

This comprises both the calculation of risk weighted assets according the Danish Executive Order on Capital Adequacy and the calculation of large exposures according to the Danish Executive Order on Large Exposures, cf Executive Order no 1472 of 13 December 2006.

The purpose of the Danish Act on Financial Stability is to ensure that claims of unsecured creditors against banks comprised by the guarantee scheme are protected. The Danish Financial Supervisory Authority considers that sections 7 and 8 of the Danish Act on Financial Stability provides for the possibility for redemption of exposures falling due that thereby is equivalent to a guarantee with direct credit protection according to the Danish Executive Order on Capital Adequacy. Furthermore, the Danish Financial Supervisory Authority considers that an exposure to the Winding-up Company, by virtue of the unlimited guarantee from the central government of Denmark to cover any losses, is equivalent to an exposure to the central government of Denmark.