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Denmark Backs ECB Bank Oversight If Terms Met, Vestager Says

Sept. 12 (Bloomberg) -- Denmark will ratify a proposal to make the European Central Bank the region’s top bank supervisor provided a number of conditions are met, Economy Minister Margrethe Vestager said.

The Nordic country wants guarantees that any coordinated bank oversight in Europe won’t put its lenders at a competitive disadvantage, “regardless of whether Denmark is part of the supervision,” Vestager said in an e-mailed reply to questions today.

“If we, as a country outside the euro, are to join the supervision, it will have to be on equal terms, ensuring that we will also be in on deciding how to set up supervision,” she said. “If a bank gets into troubles, other banks must support it. Taxpayers will not have to pay, as in the Danish model where banks stand up for each other.”

Denmark was the first European Union nation to pass so-called bail-in legislation in 2010, pushing losses on to bondholders in the event of bank insolvencies. Lenders in the country have since faced a funding squeeze that exacerbated a regional banking crisis and housing slump.

The European Union unveiled proposals for euro-area bank oversight, requiring unprecedented cooperation between the ECB and national regulators. EU leaders called for a single bank supervisor in June as a condition of allowing euro-area banks direct access to the zone’s firewall funds. Germany’s top constitutional court today cleared the way for the 500 billion-euro ($644 billion) European Stability Mechanism to become operational later this year.

The new regulatory framework will “strengthen trust in banks within the euro area and makes it difficult for Denmark to stay on the side-lines,” Nils Bernstein, the Danish central bank governor, said today in a statement. “With that in mind, it’s important that Denmark commit to constructive negotiations with the aim of establishing a healthy and effective solution as well as equal terms for all countries participating.”

To contact the reporter on this story: Peter Levring in Copenhagen at

To contact the editor responsible for this story: Tasneem Brogger at

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