Denmark : Report on Observance of Standards and Codes (ROSC)

Denmark has a high level of compliance with the Basel Core Principles for Effective Banking Supervision (BCPs). The Danish Financial Supervisory Authority (DFSA) has the appropriate legal authority to carry out supervision effectively and in its risk based approach has focused well on the key elements of risk within its banking system. Its powers and supervisory approach have evolved significantly since the recent global crisis and the DFSA emerged as a hands- on and proactive supervisor. Its overall supervisory approach is sound and the compliance with the credit-risk and capital adequacy related principles is uniformly high. The length of the examination cycle should be reduced through the use of additional resources. A more thorough and comprehensive approach to operational risk and market risk is warranted. Finally, the operational independence of the DFSA should be protected by retaining certain supervisory imperatives within the authority of the Director General, while strengthening the governance of the DFSA Board