Danish position on the communicationAn EU Framework for Cross-Border CrisisManagement in the Banking SectorHigher and better capital requirements, reformed EU supervisory infrastructure and other initiatives toenhance crisis prevention on a daily basis must be followed by a better EU Framework for Cross-BorderCrisis prevention and resolution in order to further reduce the potential public cost of possible futurefinancial crisis.Denmark shares the two objectives presented in the communication, i.e.1. “to ensure that all national supervisors have adequate tools to identify problems in banks at asufficiently early stage and to intervene to restore the health of the institution or group, orprevent further decline” and2. “to make it possible for cross-border banks to fail without serious disruption to vital bankingservices or contagion to the financial system as a whole.”

1. Early intervention

Denmark agrees on the need to harmonize the powers of supervisors in relation to

intervention tools.

Inrelation to the so called "living wills" – detailing how an institution and its business might be dismantledand wound up rapidly and in an orderly manner – there is a need to elaborate further, includingevaluating costs and benefits.Denmark believes that there are merits in further work on common indicators or thresholds, and anagreed terminology between EU supervisors, which could define when and how intervention in a cross-border bank should take place. However such indicators or thresholds should not be binding in naturebut be part of guidelines. Denmark believes it to be necessary that supervisors retain an adequate degreeof discretion in considering how to make use of intervention tools and it should not be based on onlyhard triggers.Denmark supports further work on a European framework on asset transfers to support financialstability and to prevent and mitigate financial crisis situations while at the same time assuring legalcertainty and minimizing contagion risk between companies in a group. As part of this there is a need tolook into best practices in relation to how to regulate intra-group exposures and transactions.

2. Resolution

Denmark supports the development of an EU resolution framework and finds that it shouldultimately cover all types of regulated financial institutions. Deposit-taking banks can be a startingpoint. It should apply to both cross-border banking groups and single entities which only operatecross-border through branches.

Denmark finds that the resolution framework should cover a broad range of tools in order to enablemember states to address a specific crisis most appropriately. Private sector tools have priority andthe tools must be in compliance with the Treaty and State aid rules. Furthermore, guidelinesregarding when the use of these tools could be considered as being in compliance with the Treatyand State aid rules would be valuable.In relation to the right of shareholders, creditors and counterparties there is a need to limit the rightsof shareholders in a resolution situation, but not creditors and counterparties. A set of commonindicators and thresholds for the limitations of the rights of shareholders should be developed.

A European Resolution Authority for banking groups does not seem desirable as resolutions canimpact considerably on national public budgets. Furthermore, burden sharing and resolution are alsoconnected, and at this stage Denmark finds that concrete solutions in a crisis situation should becoordinated in the Cross-Border Stability Groups.Denmark finds that burden sharing should be prepared as much as possible, i.e. how to define theburden, agree on the principles behind the distribution of the burden, coordination issues etc.Further investigation on how the private sector can contribute more to potential burdens isappropriate and is encouraged.

1. Early intervention

intervention tools.

2. Resolution

3. Insolvency