Financial Crime World

Banking Licence Application Process in Denmark

To obtain a banking licence in Denmark, applicants must submit a written application to the Financial Supervisory Authority (FSA). The process is thorough and requires a significant amount of documentation.

Application Requirements

According to industry experts at Carsted Rosenberg Advokatfirma, the application should cover various aspects, including:

  • Articles of association and minutes from the incorporation
  • Information about share capital and evidence that it has been fully paid-in
  • Opening balance sheet and budgets for the first three years
  • Business model and plan
  • IT structure and statements from the applicant accountant
  • 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, proposed auditor, timetable for application and commencement of permitted activities, and fit and proper applications for the board of directors, management, and shareholders with a qualifying interest

Processing Time

The FSA has six months to process the application, provided it contains all necessary information and documentation. If any information is missing, the deadline will be postponed until all required documents are submitted.

Regulatory Capital and Liquidity

Denmark’s banking system is typically funded through a combination of share capital supplemented by various forms of tier 2 capital. The minimum capital requirement for banks in Denmark is a paid-in share capital of €5 million. Additionally, the board of directors and management must ensure that the bank holds sufficient capital to cover its risks.

Supervision of Banking Groups

Banking groups are supervised on a consolidated basis in accordance with the Financial Business Act and the Capital Requirements Regulation. If the parent company is located in another EU/EEA country, the Danish FSA will primarily supervise the Danish branch or subsidiary and assist the home- state regulator in overall supervision.

Systemically Important Banks

Systemically important financial institutions (SIFIs) and global systemic important financial institutions (G-SIFIs) are subject to a special regulatory regime set out in Chapter 19 of the Financial Business Act. This includes requirements such as:

  • Maintaining a specific SIFI capital buffer
  • Identifying key personnel
  • Establishing committees on remuneration, nomination, and risk
  • Limiting board and management positions
  • Restrictions on bonus schemes and variable remuneration

Central Bank Role

The Danish central bank (Nationalbanken) plays a crucial role in ensuring stable prices, safe payments, and a stable financial system. It achieves this by:

  • Committing to a fixed exchange rate policy vis-à-vis the euro
  • Acting as a banker for all Danish banks
  • Overseeing and assessing financial stability in Denmark

Activities

The Danish banking sector is subject to various regulations, including those related to:

  • Mortgage lending
  • Consumer credit
  • Investment services
  • Payment services and e-money

For instance, mortgage credit institutions are regulated by the Financial Business Act, while consumer credit is governed by the Credit Agreement Act.