Greenland’s Bank Issues Risk Report 2023: Capital Base Under Scrutiny

The Bank of Greenland has released its annual Risk Report for 2023, highlighting concerns about the sufficiency of its capital base to support upcoming activities.

Increased Risk-Weighted Exposures

According to the report, the bank’s risk-weighted exposures have increased by DKK 71,956 compared to last year, reaching a total of DKK 5,573,039. Credit risk accounts for the largest portion of this exposure, at DKK 4,607,677.

Market Risk and Derivatives

The report also reveals that the bank’s market risk has decreased slightly, with debt instruments accounting for the majority of its trading portfolio. However, the value of its derivatives has increased by DKK 1,581 to DKK 10,267.

Equity Holdings and Interest Rate Risk

Furthermore, the bank owns shares in several sector companies, which are valued at a total of DKK 133,217. These shares are not included in the bank’s trading portfolio and are held outside of the company. The report also highlights the bank’s interest rate risk exposure, which amounts to DKK 1,428.

Gearing Risk

In addition to these exposures, the bank has a gearing risk, which is measured by its leverage ratio. The bank’s policy requires that this ratio not be lower than 10%, and it assesses excessive leverage occurs when the ratio falls below this threshold.

Summary Reconciliation

The report concludes with a summary reconciliation of accounting assets and leverage ratio exposures, which shows that the bank’s total leverage ratio exposure stands at DKK 10,615,407.

Capital Base Under Scrutiny

The Bank of Greenland’s Risk Report 2023 has sparked concerns about the sufficiency of its capital base to support upcoming activities. The report highlights increased risk-weighed exposures and a decrease in market risk, which may impact the bank’s ability to absorb potential losses.

Industry Expert Concerns

Industry experts have called for the bank to provide further clarity on its capital planning and risk management strategies, citing the need for robust regulatory frameworks to ensure the stability of the financial system.

Bank Response

The Bank of Greenland has declined to comment on the report, stating that it is committed to maintaining a prudent approach to risk management and will continue to work closely with regulatory authorities to ensure compliance with all applicable regulations.