1 Legal framework

1.1 Which legislative and regulatory provisions govern the banking sector in your jurisdiction?

The main regulatory framework for the banking sector is the Financial Business Act (Consolidated Act 937 of 6 September 2019), which contains the overall regulation of all financial institutions (banks, mortgage credit institutions, insurance companies and investment firms). Among other things, it regulates the permitted activities, licensing requirements, duties and responsibilities of financial institutions and their management, as well as containing provisions on the supervision and the supervisory powers of the Danish Financial Supervisory Authority (FSA).

The Financial Business Act as such is to a large degree based on EU legislation and implements a number of the key directives in respect of the financial sector (see question 1.2).

The regulatory framework of the Financial Business Act is supplemented by a substantial number of executive orders issued by the FSA which contain more specific and detailed provisions in relation to a number of key areas, such as outsourcing, management and governance, recovery plans, remuneration, risk labelling of investment products and good business practices for financial institutions.

In addition, the FSA has issued a number of guidance papers which further elaborate how the various provisions should be interpreted and applied in practice.

1.2 Which bilateral and multilateral instruments on banking have effect in your jurisdiction? How is regulatory cooperation and consolidated supervision assured?

Danish banking regulation is to a large degree harmonised with the rest of the European Union on the basis of numerous EU directives and EU regulations within the financial services area. Within the banking sector, the EU directives have primarily been implemented into Danish law through incorporation in the Financial Business Act, while the EU regulations are directly applicable.

The FSA cooperates with EU regulators in respect of cross-border banking activities, with the home-state regulator being primarily responsible for overall supervision and the host-state regulator having a secondary role in the supervision of local branches and so on.

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers (including sanctions) do they have?

The primary regulator is the FSA, whose overall objective is to ensure financial stability and confidence in the financial institutions and markets.

To this end, the FSA monitors compliance with the Financial Business Act, among others – partly through the issuance of executive orders and guidance notes and ongoing open dialogue with financial institutions, and partly through regular on-site inspections of financial institutions.

In relation to the supervision of banks, the FSA's primary focus is on capital adequacy and solvency requirements; compliance in other areas is monitored on the basis of a risk-based approach, with high-risk areas monitored more closely than low-risk areas.

The FSA has wide-ranging supervisory powers in relation to enforcement of the Financial Business Act and other supplemental legislation. The FSA can require banks to submit all information and documentation it deems necessary in order for it to monitor compliance with the Financial Business Act, either in connection with an inspection or on a standalone basis. Such requests are in addition to the ongoing regular reporting requirements in respect of solvency, liquidity and similar matters.

In addition, the FSA can order an investigation of a bank in respect of a particular area of interest either by the FSA itself or by external experts if deemed necessary by the FSA. The costs of such investigations are for the account of the relevant financial institution.

Banks which are found to be in severe or repeated breach of the Financial Business Act are normally put under so-called ‘increased supervision', which results in a more onerous reporting regime, among other things.

The FSA provides for a number of sanctions for non-compliance with the Financial Business Act. Violations of the Financial Business Act are normally sanctioned by public reprimands. In severe cases, administrative fines may be issued. If the violation is ongoing, the FSA will either order the relevant bank to refrain from the activities which violate the Financial Business Act or otherwise order the bank (typically within a certain timeframe) to take corrective actions.

Ultimately, the FSA may remove the management of the bank by withdrawing their ‘fit and proper' approval or may withdraw the banking licence altogether.

1.4 What are the current priorities of regulators and how does the regulator engage with the banking sector?

In general, capital adequacy and solvency requirements are a top priority for the FSA. During the COVID-19 crisis, the FSA has in particular focused on whether banks hold sufficient capital to withstand the current economic downturn, which is expected to lead to higher losses for banks.

Other top priorities include anti-money laundering, outsourcing, IT security and an increased focus on the viability of certain banks' business models in a low-interest rate environment.

The FSA is proactively engaging with the banking sector – both formally through its regular inspections, the issuance of executive orders and so on, and informally by attending sector-specific seminars, giving speeches and so on.

2 Form and structure

2.1 What types of banks are typically found in your jurisdiction?

The Danish banking sector is made up of banks, savings banks and mortgage credit institutions.

Banks are organised as limited liability companies, are often publicly listed and provide finance for everything from private individuals over small businesses to large Danish and international corporations. Traditionally, Danish banks have been organised as universal banks and therefore there are no specific distinctions between commercial banking and investment banking (although investment banking activities, for practical purposes, are often separated into special departments or divisions within the banks).

Historically, savings banks have been owned by their customers and have traditionally provided finance for private persons and small businesses within a certain area. Therefore, they often have a strong local or regional presence. However, within the last few years, a number of savings banks have been converted into limited liability companies and have been listed in order to make their business models more viable and access to capital easier.

Mortgage credit institutions are essentially ‘niche banks', in the sense that they only finance real estate. Unlike banks, they fund themselves not through deposits, loans and similar, but solely through the issuance of mortgage-backed bonds in the form of covered bonds. The stable funding enables mortgage credit institutions not only to offer very attractive interest rates, but also to offer fixed-rate mortgage loans with maturities of up to 30 years. The Danish mortgage system offers one of the lowest interest rates to borrowers in Europe and the lowest borrowing costs for the first priority tranche of the property value, due to Denmark's unique mortgage credit system. The combination of a tightly regulated framework, credit and risk management and wholesale funding through a pass-through system provides close to capital markets funding conditions through the issuance of individually matched bonds for each individual borrower. The high liquidity and the attractiveness of the bonds due to their high security level result in very low and competitive prices for borrowers.

2.2 How are these banks typically structured?

Banks and mortgage credit institutions are organised as limited liability companies.

Savings banks have traditionally been organised as independent institutions owned by their own customers. While there are still some traditional savings banks left, there has been an increased trend for them to convert into limited liability companies – although some of them, for historic reasons, have retained the ‘savings bank' label as part of their name.

A very small number of credit institutions are still organised as credit cooperatives under special legislation. These will most likely disappear in time, given that their governance and funding structure in practice limit their size.

2.3 Are there any restrictions on foreign ownership of banks?

There are no explicit restrictions on foreign ownerships of banks. However, any shareholder acquiring a so-called ‘qualifying interest' (ie, 10% or more or the shares or voting rights or any other shareholding that gives the shareholder a material influence over the bank's management) must be approved as ‘fit and proper' by the Financial Supervisory Authority (FSA).

As part of the ‘fit and proper' approval, the FSA will assess, among other things:

  • whether the acquisition of a qualifying interest will lead to the bank becoming part of a group structure (eg, by becoming a subsidiary), and whether such structure still enables the FSA to supervise it effectively; and
  • whether the FSA can exchange and cooperate with the relevant competent authority of the parent undertaking.

Where the acquirer is an EU-regulated entity or an entity regulated by a competent authority in a country with which the European Union has a cooperation agreement in place, this will be less of a concern. However, if the acquirer is situated in a third country, the ‘fit and proper' approval will be subject to more scrutiny.

2.4 Can banks with a foreign headquarters operate in your jurisdiction on the basis of their foreign licence?

EU and European Economic Area (EEA) banks can in general provide banking services in Denmark either on a cross-border basis or through a Danish branch office under the EU passporting regime. The relevant bank must be duly licensed in its home country and its home-state regulator must be notified accordingly, which in turn will notify the Danish FSA.

The bank will continue to be subject to the supervision of its home-state regulator, but the FSA will monitor the branch in respect of the conduct of business regulation and will also monitor the branch in order to assist the home-state regulator in its supervision.

Banks from non-EU/EEA countries cannot rely on the EU passporting regime and will need to establish either a branch or a full subsidiary if they wish to offer the full spectrum of banking services.

3 Authorisation

3.1 What licences are required to provide banking services in your jurisdiction? What activities do they cover?

In order to provide traditional banking services (deposit taking and lending), a banking licence is required pursuant to Section 7 of the Financial Business Act.

A Danish banking licence covers the following activities:

  • acceptance of deposits and other repayable funds;
  • lending, including:
    • consumer credit;
    • mortgage credit;
    • factoring and discounting; and
    • commercial credits (including forfaiting);
  • financial leasing;
  • payment services covered by Annex 1 of the Payments Act;
  • issue and administration of other means of payment (eg, travellers' cheques and bankers' drafts);
  • guarantees and collateralisation;
  • dealing for own account or for the account of clients in:
    • money market instruments (eg, cheques, bills, certificates of deposit);
    • foreign exchange;
    • financial futures and options;
    • exchange and interest-rate instruments; and
    • transferable financial instruments;
  • participation in issuing financial instruments and provision of related services;
  • advice to undertakings on capital structure, industrial strategy and related questions and advice, as well as services relating to mergers and acquisitions;
  • money broking;
  • portfolio management and advice;
  • safekeeping and administration of financial instruments;
  • credit reference services;
  • safe custody services; and
  • issuance of electronic money.

The above list sets out the permitted activities for a bank holding a Danish banking licence. EU/EEA banks which have been passported into Denmark are subject to a slightly different list of permitted credit institution activities (see Annex 2 of the Financial Business Act).

3.2 What requirements must be satisfied to obtain a licence?

The applicant must fulfil the following requirements in order to obtain a banking licence:

  • It has a paid-in share capital of at least €5 million;
  • The board of directors and the management are deemed ‘fit and proper';
  • Shareholders holding a ‘qualifying interest' (see question 2.3) are equally deemed ‘fit and proper';
  • There are no close links between the applicant and any undertakings or persons which hold a substantial stake in the applicant which could otherwise complicate or hinder supervision by the Danish Financial Supervisory Authority (FSA);
  • There is no third-country legislation applicable to an undertaking or person with close links to the applicant which would otherwise complicate or hinder supervision by the FSA;
  • Appropriate administrative procedures and controls are in place; and
  • The applicant has its headquarters and registered office in Denmark.

3.3 What is the procedure for obtaining a licence? How long does this typically take?

In order to obtain a banking licence, the applicant must submit a written application to the FSA. There is no prescribed format for the application, but it must contain all information and documentation necessary in order for the FSA to assess whether the requirements for obtaining a banking licence are met. In general, the application should cover the following:

  • the applicant's articles of association and minutes from the incorporation for the company;
  • information about the share capital and evidence that it has been fully paid-in;
  • the opening balance sheet and budgets for the first three years;
  • a description of the business model/business plan;
  • information on the IT structure and statements from the applicant accountant in respect of IT and so on;
  • rules of procedure for the board of directors and management instruction;
  • written procedures for relevant activities, risk management, conflicts of interest, internal controls, IT security and so on;
  • the name of the proposed auditor of the applicant;
  • a timetable for the application and commencement of permitted activities; and
  • fit and proper applications for the board of directors, management and shareholders with a qualifying interest (or information on the 20 largest shareholders, if no single shareholder has a qualifying interest).

The FSA has six months to process the application, assuming that the application contains all necessary information and documentation; otherwise, the deadline will be postponed until all information is at hand.

4 Regulatory capital and liquidity

4.1 How are banks typically funded in your jurisdiction?

Banks are normally funded through a combination of share capital supplemented by various forms of tier 2 capital.

4.2 What minimum capital requirements apply to banks in your jurisdiction?

The minimum capital requirement for banks is a paid-in share capital of €5 million.

4.3 What legal reserve requirements apply to banks in your jurisdiction?

The board of directors and the management of a bank must at all times ensure that the bank holds sufficient capital to cover its risks (eg, credit risk, market risk, operational risk). As part of this assessment, among other things, they are required to calculate the bank's individual solvency requirement and hold sufficient capital to cover this requirement. The Danish Financial Supervisory Authority may increase the individual solvency requirement and order the bank to increase its own funds if it deems that the solvency requirement set by the bank is insufficient to cover its risk exposure.

5 Supervision of banking groups

5.1 What requirements apply with regard to the supervision of banking groups in your jurisdiction?

Banking groups are supervised on a consolidated basis in accordance with the Financial Business Act and on the basis of the Capital Requirements Regulation.

If the parent company in the banking group is situated in another EU/European Economic Area country, the Danish Financial Supervisory Authority will primarily supervise the Danish branch or subsidiary and will otherwise assist the home-state regulator in the overall supervision of the banking group.

5.2 How are systemically important banks supervised in your jurisdiction?

Systemic important financial institutions (SIFIs) and global systemic important financial Institutions (G-SIFIs) are subject to the special regulatory regime set out in Chapter 19 of the Financial Business Act. Chapter 19 contains detailed provisions on how SIFIs and G-SIFIs are identified (ie, the qualification criteria), as well as the specific requirements that apply if a bank qualifies as a SIFI. The requirements include the following:

  • an obligation to maintain a specific SIFI capital buffer;
  • an obligation to identify key personnel;
  • an obligation to establish committees on remuneration, nomination and risk;
  • limits on the number of other board and management positions that a board member in a SIFI/G-SIFI may have besides his or her current position; and
  • various restrictions and requirements in relation to bonus schemes and variable remuneration.

5.3 What is the role of the central bank?

The main objectives of the Danish central bank (Nationalbanken) are to contribute to ensuring:

  • stable prices;
  • safe payments; and
  • a stable financial system.

These objectives are met by:

  • committing to a fixed exchange rate policy vis-à-vis the euro which enables the central bank to keep inflation low (through a combination of monetary and exchange rate policies);
  • acting as a banker for all Danish banks, which ensures that interbank payments can be settled in a safe manner; and
  • overseeing and assessing financial stability in Denmark

6 Activities

6.1 What specific regulations apply to the following banking activities in your jurisdiction: (a) Mortgage lending? (b) Consumer credit? (c) Investment services? and (d) Payment services and e-money?

(a) Mortgage lending?

Mortgage credit institutions which provide the bulk of all mortgage lending are regulated by the Financial Business Act as such. Mortgage lending in itself is – to the extent that the mortgage loans are provided by mortgage credit institutions – regulated by Consolidated Act 1188 dated 19 September 2018 on Mortgage Loans and Mortgage Bonds. The Mortgage Loan Act partly regulates the mortgage loans themselves (security, maturity and repayment, loan-to-value, valuation of the properties), and partly the issuance of the mortgage bonds which funds the mortgage loans.

(b) Consumer credit?

Consumer credit is regulated by Consolidated Act 817 dated 6 August 2019 on Credit Agreements. The Credit Agreement Act implements a number of EU directives within the consumer credit sphere and contains detailed provision on consumer credit agreements, but also more general provisions on title retention arrangements in connection with the provision of credit.

(c) Investment services?

Investment services are primarily regulated by the Financial Business Act, which regulates investment firms as such, as well as the executive order on investor protection in relation to the provision of investment services and so on.

(d) Payment services and e-money?

Payment services and the provision of such services are regulated by Consolidated Act 1024 dated 3 October 2019 on Payments, which implements the EU Second Payment Services Directive (2015/2366) and sets out the licensing requirements and similar in relation to e-money and payment services.

7 Reporting, organisational requirements, governance and risk management

7.1 What key reporting and disclosure requirements apply to banks in your jurisdiction?

Banks are subject to a number of ongoing reporting requirements in respect of their capital, solvency and so on, and may be subject to additional reporting requirements if deemed necessary by the Danish Financial Supervisory Authority (FSA).

In addition, banks must disclose summarised versions of the inspection reports from the FSA on their website once an inspection has been concluded. The summaries must contain the FSA's key findings, any orders or reprimands issued by the FSA as well as certain risk information, among other things.

7.2 What key organisational and governance requirements apply to banks in your jurisdiction?

Pursuant to Section 70 of the Financial Business Act, the board of directors of a bank has overall responsibility for the management of the bank and the supervision of the management. Its primarily role is to:

  • specify which business activities the bank should be engaged in;
  • identity and quantify significant risk to which the bank is exposed and determine the bank's risk profile;
  • adopt policies on how the bank should manage its business activities and the associated risk; and
  • adopt a diversity policy for the board of directors which ensures sufficient diversity as to qualifications and competences among the board members.

In addition to these more general duties, the board of directors must issue detailed written guidelines to the management on how these policies are to be implemented in the day-to-day management.

Section 71 of the Financial Business Act specifies how the bank should be organised on a general level. In this regard, Section 71 requires, among other things, that the bank have:

  • a clear organisational structure with a well-defined, transparent and consistent division of responsibilities;
  • good administrative and accounting practices;
  • written procedures for all significant areas of activity;
  • effective procedures to identify, manage, monitor and report the risks to which the undertaking is or can be exposed;
  • the necessary resources to carry out its activities and appropriate use of these;
  • procedures with a view to separating functions in connection with management and prevention of conflicts of interest;
  • full internal control procedures;
  • adequate IT control and security measures; and
  • the staff and financial resources which are necessary to secure sufficient possibilities of introduction and continuing professional development courses for members of the board of directors or board of management.

Sections 70 and 71 are supplemented by an executive order on the management of governance of banks issued by the FSA.

7.3 What key risk management requirements apply to banks in your jurisdiction?

Risk management is an integral part of the overall governance requirements (see Section 70 of the Financial Business Act). In practice, banks must establish a risk management function and appoint a person who has overall responsibility for all risk management.

7.4 What are the requirements for internal and external audit in your jurisdiction?

All banks must have external auditors, which must audit the bank's financial statements. In addition, banks which for two consecutive financial years have had 125 or more full-time employees must also have an internal audit. Smaller banks may also have an internal audit if decided by the board of directors.

8 Senior management

8.1 What requirements apply with regard to the management structure of banks in your jurisdiction?

Danish banks operate with a two-tier management system, consisting of:

  • a supervisory board of directors, which has overall responsibility for the management of the bank on a strategic level, in addition to control and oversight responsibility; and
  • the management – sometimes referred to as the management board – which is responsible for the day-to-day management of the bank.

8.2 How are directors and senior executives appointed and removed? What selection criteria apply in this regard?

The board of directors is elected and can be removed by the shareholders of the bank. The managing director of a bank is appointed and removed by the board of directors.

The Danish Financial Supervisory Authority may require that the board of directors remove a senior executive if he or she is no longer deemed ‘fit and proper', and may also require that a board member resign if he or she is no longer deemed ‘fit and proper'.

8.3 What are the legal duties of bank directors and senior executives?

The bank management is responsible for the day-to-day management of the bank, in accordance with the policies and guidelines laid down by the board of directors.

8.4 How is executive compensation in the banking sector regulated in your jurisdiction?

The board of directors must adopt a remuneration policy which applies to the board of directors, the management and other persons whose activities have a significant impact on the bank's risk profile. The remuneration policy must be reviewed at regular intervals and must contain appropriate principles for the remuneration, taking into account the size of the bank, the complexity, conflict of interest issues and so on. In addition, the Financial Business Act and the relevant executive order on remuneration in banks contain fixed restrictions on the variable part of the overall remuneration package, which in general must not exceed a specific percentage of the overall pay package for board members and members of management (50%) or persons whose activities significantly affect the bank's risk profile (100%).

9 Change of control and transfers of banking business

9.1 How are the assets and liabilities of banks typically transferred in your jurisdiction?

The reason for the transfer determines how assets and liabilities are transferred. If the bank is distressed, the bank will be assumed by the Financial Stability Company to pursue a controlled dissolution in lieu of outright bankruptcy (see question 14). The Danish Financial Supervisory Authority (FSA) will ordinarily issue a notice to the distressed bank on a Friday afternoon with a view to having the bank's assets transferred by Sunday evening, thus avoiding a ‘bank run'. The transfer to another bank of all or part of the distressed bank's activities is the primary objective; only if no market-based solution can be found will the dissolution process be initiated.

In the ordinary course of events, outside a distressed scenario, a transfer of banking activities can take place by way of merger or acquisition. Whether an asset or a share deal is chosen depends on the specific circumstances of the acquisition. The transfer will be governed by the Financial Business Act and will require close coordination with the regulator to obtain approval (see Section 204 of the act). Approval must be notified within a two-month timeframe and can be rejected, for example, on public order grounds (see Section 204(3) of the act).

A successful outcome will depend on the contractual framework governing the bank's activities (eg, whether there are any clauses on the hybrid tier 2 capital that would require prior note holder consent). In practice, convening a meeting of the noteholders to obtain consent will often be impractical or futile, and mergers have taken place without prior consent of the note holders despite the theoretical risk of a technical cross-default.

9.2 What requirements must be met in the event of a change of control?

A change of control must be notified to the FSA and the acquirer must be deemed ‘fit and proper' by the FSA. This requirement is triggered by an acquisition of a ‘qualifying interest' (see question 2.3). An additional ‘fit and proper' approval requirement is triggered if the shareholding is subsequently increased to 20%, 33% or 50%, of if the bank otherwise becomes a subsidiary of the acquirer.

10 Consumer protection

10.1 What requirements must banks comply with to protect consumers in your jurisdiction?

In general, banks must treat all their customers fairly, including consumers (see the general standard of good business practice in Section 43 of the Financial Business Act). This general principle is supplemented by a number of more specific requirements, depending on the specific business area (eg, consumer credit, financial services).

The acceptance of guarantees by banks and the content of such guarantees from non-commercial customers (ie, consumers and private individuals) are specifically regulated in the Financial Business Act.

10.2 How are deposits protected in your jurisdiction?

Ordinary deposits are covered by the Danish Guarantee Fund for Depositors and Investors up to €100,000 per customer. Certain other types of deposits, such as deposits in connection with real estate, are covered up to €10 million.

11 Data security and cybersecurity

11.1 What is the applicable data protection regime in your jurisdiction and what specific implications does this have for banks?

Danish banks are in general subject to the General Data Protection Regulation (GDPR), as well as Danish Act 502 dated 23 May 2018 on Data Protection, which supplements the GDPR.

11.2 What is the applicable cybersecurity regime in your jurisdiction and what specific implications does this have for banks?

While there has been an increase in cyberattacks against banks in the past couple of years, cybersecurity in the Danish financial sector is still considered to be best in class in Europe. The Danish financial sector – partly aided by the Danish central bank – has invested considerable resources in ensuring a secure and efficient IT infrastructure.

The adoption across the board of a digital signature solution for all citizens and businesses has significantly increased the use of electronic transactions and solutions. NemID is a common secure login for internet services, to be used for online banking, self-service, obtaining information from the public authorities and engaging with one of the many businesses that use NemID. The official digital signature is combined with a statutory email inbox to be used by all citizens and businesses. This will also be used for communication with bank customers. The result is a high degree of digitalisation, which in turn has resulted in a high degree of resilience during the COVID-19 crisis, as most transactions and communication could be maintained without significant interruption. Banks will therefore have to apply the national NemID solution for online banking for both businesses and citizens.

12 Financial crime and banking secrecy

12.1 What provisions govern money laundering and other forms of financial crime in your jurisdiction and what specific implications do these have for banks?

Danish banks are subject to Consolidated Act 380 dated 2 April 2020 on Measures to Prevent Money Laundering and Financing of Terrorism (AML Act). The AML Act requires banks to assess the risk of being used to launder money or finance terrorism, as well as to implement appropriate risk management procedures. As part of these procedures, banks must:

  • adopt strict ‘know-your-customer' procedures;
  • monitor customers' transactions; and
  • investigate and potentially report suspicious transactions to the Public Prosecutor for Serious Economic and International Crime.

12.2 Does banking secrecy apply in your jurisdiction?

Yes, pursuant to Section 117 of the Financial Business Act, financial institutions (including banks) may not divulge or otherwise utilise confidential information about their customers. The banking secrecy principle is subject to certain exemptions (eg, consent, erroneous transfer of money, disclosure of certain information for administrative and risk management purposes), and is subject to overriding provisions of law (eg, disclosure of information to tax authorities).

13 Competition

13.1 What specific challenges or concerns does the banking sector present from a competition perspective? Are there any pro-competition measures that are targeted specifically at banks?

The Danish banking sector is quite concentrated, with a few banks having a dominant position, which could potentially give rise to concerns. However, so far there is no evidence of any particular issues in this regard.

14 Recovery, resolution and liquidation

14.1 What options are available where banks are failing in your jurisdiction?

Pursuant to Section 71a of the Financial Business Act, banks must prepare and maintain recovery plans that contain, among other things, a broad range of recovery models which can be implemented if the bank becomes distressed. The recovery plan must be submitted for approval to the Danish Financial Supervisory Authority (FSA). If a bank is failing and if no alternative measures are likely to prevent its failure, the Danish Financial Stability Company may resolve the situation by intervening. The resolution tools available to the bank are:

  • a sale of the bank or its assets;
  • the establishment of a bridge institute which will acquire all or part of the assets and liabilities of the relevant bank;
  • a separation of performing and non-performing assets of the bank; and
  • a bail-in.

14.2 What insolvency and liquidation regime applies to banks in your jurisdiction?

A bank may be either:

  • liquidated by way of a solvent liquidation on the shareholders or (in some instances) the FSA's initiative pursuant to the Financial Business Act and the Companies Act; or
  • liquidated or reconstructed through a bankruptcy or reconstruction procedure pursuant to the Financial Business Act and the Bankruptcy Act.

15 Trends and predictions

15.1 How would you describe the current banking landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

For the past couple of years, there has been an increased focus on compliance, bank management and even the behaviour and culture in banks and management. The expectation is that this trend will continue.

To this end, the Danish Financial Supervisory Authority (FSA) has increased its focus on the ‘fit and proper' approval of board members and members of the management. Most recently, the FSA has issued a set of very detailed recommendations in respect of its ‘fit and proper' approval of senior management, including detailed guidelines on the required level of experience, seniority and so on of potential members of senior management.

15.2 Does your jurisdiction regulate cryptocurrencies? Are there any legislative developments with respect to cryptocurrencies or fintech in general?

There is no specific law on cryptocurrencies, as they are instead governed by the general financial regulatory regime. However, the Danish FSA has set up various workshops within the fintech area, working with various fintech start-ups in respect of the various regulatory requirements, including a sandbox solution. In general, the high degree of digitalisation in Danish society serves as fertile ground for cryptocurrencies, but always tempered by the mandatory requirements for transparency, taxation and the prevention of money laundering and terrorist financing.

16 Tips and traps

16.1 What are your top tips for banking entities operating in your jurisdiction and what potential issues would you highlight?

The Danish Financial Supervisory Authority (FSA) actively encourages open dialogue with the financial sector and the entities which are subject to its supervision. Any banks entering the Danish market should reach out to the FSA relatively early in the process to present themselves and their business plans in Denmark. While such early interaction is not required from a strict legal perspective, it often smooths the subsequent application process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.