Danske Bank withdraws its appeal against IRB orders

Company Announcement No. 18/2014

Danske Bank has today decided to withdraw its appeal against the Danish Financial Supervisory Authority’s (FSA’s) orders of 17 June 2013. The appeal, which is being handled by the Danish Company Appeals Board, concerns the Bank’s use of the internal ratings-based approach for capital adequacy purposes (the IRB approach). This was described in greater detail in the Bank’s company announcements No. 9/2013 of 17 June 2013 and No. 10/2013 of 12 June 2013.

“During the course of the appeal, we have had a constructive dialogue with the Danish FSA about the work on the IRB models going forward, and we now wish to conclude this issue,” says Danske Bank’s CFO, Henrik Ramlau-Hansen. “We have therefore chosen to withdraw the appeal.”

The Bank began implementation of the FSA’s requirements when the orders were issued, and the effects of this were described in the Bank’s company announcements, financial statements and Investor Relations communications. These materials, as well as the FSA’s decision of 17 June 2013, are available at danskebank.com/ir. The implementation of all the orders continues in dialogue with the Danish FSA. In accordance with the orders, Danske Bank has increased its risk weights for the corporate portfolio excluding items with counterparty risk by 10 percentage points compared with the level in the statement of capital adequacy at the end of 2012.

The current temporary add-on of 3 percentage points to the risk weights for the corporate portfolio excluding items with counterparty risk, which are separate from the 10 percentage points required by the orders, will no longer apply during the course of 2014 in connection with the implementation of new IRB models.

This will result in a pro forma increase in the Bank’s common equity tier 1 capital ratio, which at the end of Q1 2014 amounted to 14.0%, by around 0.4 of a percentage point.

Yours faithfully,
Danske Bank A/S

CFO Henrik Ramlau-Hansen, tel. +45 45 14 06 66