Danske Bank's follow-up to the Estonia case

The Danish Supervisory Authority has issued a decision on Danske Bank's follow-up to the eight orders that were part of the decision of 3 May 2018 on management and control in relation to the Estonian branch. Due to increased compliance and reputational risks, the bank received an order to re-evaluate the solvency need and, as a minimum, to increase its Pillar II add-on covering these risks to at least DKK 10 billion.

Translation from original text in Danish. In case of discrepancies, the Danish version prevails.


Based on Danske Bank's response from 29 June 2018 to the eight orders, the Danish Financial Supervisory Authority assesses that, at that stage, the bank was in compliance with seven of the eight orders or had initiated suitable measures to fulfil them.

However, an order on strengthening governance for decision processes and strengthening documentation of decision processes etc. had not been fulfilled.

Order on re-evaluating the solvency need and increase the Pillar II add-on for compliance and reputational risks

With regard to the development, the Danish Financial Supervisory Authority assesses that the bank's compliance and reputational risks are now greater than determined in the decision from 3 May. The bank must therefore re-evaluate the Pillar II add-on for covering these risks. The Danish Financial Supervisory Authority estimates that the Pillar II add-on must, at an absolute minimum, be increased to DKK 10 billion. Furthermore, the Pillar II add-on must be fulfilled with Common Equity Tier 1 capital.

Further follow-up by the Danish Financial Supervisory Authority

For some of the orders from the decision of 3 May, the Danish Financial Supervisory Authority is only able to conclusively determine compliance once the bank's measures have been fully implemented. The Danish Financial Supervisory Authority will monitor the bank's implementation of the measures and the development in the governance culture, says Jesper Berg, Director General:

"Changes in the governance and company culture and the restoration of the bank's reputation have a longer perspective. Therefore, the Danish Financial Supervisory Authority expects that the bank's compliance and reputational risks will remain increased over the coming years," says Jesper Berg.

On today's decision

The decision includes the Danish Financial Supervisory Authority's supervisory reaction as a follow-up to the assessment of the bank’s compliance with the orders of 3 May 2018. The decision has been processed by the Board of the Danish Financial Supervisory Authority and is published in accordance with the rules on openness concerning decisions made by the board.

The decision does not cover assessments concerning the bank's own investigations into its management’s handling of the case. After the conclusion of the bank's own investigation, the Danish Financial Supervisory Authority has, as previously indicated, resumed the work that was initially concluded with the decision in May. This work will focus on whether the basis for the decision in May concerning the managerial responsibility has changed and can warrant new supervisory reactions. The Danish Financial Supervisory Authority will later arrive at a conclusion on this matter.