Danske Bank RWA spat worries modelling experts
Danske Bank and its regulator were pitched into open conflict in mid-June, when the Danish Financial Supervisory Agency told the bank to hold more capital for corporate loans – an order Danske is contesting. It’s the latest example of supervisory modelling scepticism, and it could have implications for other banks. Tom Newton reports
It's no secret that bank supervisors are newly sceptical about regulatory capital modelling, but it’s still unusual to see a public argument on the topic between a lender and its regulator, so Danske Bank’s July 12 decision to fight an order that would add an estimated Dkr100 billion to its risk-weighted assets (RWAs) – a jump of 12.5% – provides a rare insight into changing regulatory attitudes. And it could become a blueprint for further modelling showdowns.
Finanstilsynet, the Danish
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