The Danish Financial Supervisory Authority has launched a project to enable smaller, non-complex Danish credit institutions to be subject to simpler and more proportionate requirements, with the aim of building a national proportionality regime alongside the EU framework. Work will at a minimum cover recovery plans, permissions for redemption of own capital instruments, corporate governance and risk management requirements, and guidance on capital base and solvency needs. A draft updated order and guidance on recovery plans has been sent for public consultation, proposing to move the submission frequency from annual to every three years for firms eligible for simplified obligations, extend simplified obligations to more institutions, and raise the balance sheet threshold for using a capital procurement plan instead of a fuller recovery plan to DKK 2bn from DKK 1bn. The authority also plans to publish sector guidance on simplified approval processes for limited permissions to redeem own capital instruments, intended in particular for small and medium-sized institutions that meet conditions such as capital headroom, and it will consider further simplifications including in light of approaches flagged by the European Central Bank’s Single Supervisory Mechanism. Further proportionality options under the management executive order are expected to be developed into a proposal that could be implemented in 2027, while updated solvency-need guidance is intended to allow simpler methods for calculating capital add-ons and reduce supplementary analysis without lowering risk coverage. The authority will assess whether additional areas can be brought into the proportionality framework and plans to provide a status update at the end of 2026.

Original source View in tracker