However, the merged entity needs to have been found viable by the Danish Financial Supervisory Authority.
Furthermore, the total balance sheet of the merged entity may not exceed €3 billion. This is in line with the thresholds applied in the Danish winding-up and compensation schemes. Mergers that exceed this threshold would need to be notified individually to the Commission for scrutiny under the state aid rules.
The Danish banking sector is highly fragmented, with many small banks which are only active at a local level. These banks have difficulties procuring funding from the international wholesale funding markets, which as a result of the financial crisis are not yet functioning properly. In this context, banks wanting to consolidate might be hindered from merging because of funding considerations.
The Commission therefore found the scheme to be compatible with its rules on state aid for banks during the crisis.
The overall budget of the scheme is DKK 50 billion (approximately €6.7 billion). Guaranteed liabilities with a maturity of more than three years are capped to correspond to a maximum of one third of the total budget of the scheme.
Press release
© European Commission
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