COPENHAGEN (Reuters) – Denmark has bolstered defenses against shocks to its financial system after a risk-assessment body said the sector’s stability could be threatened by the Danske Bank (DANSKE.CO) money laundering scandal.
Danske Bank’s CEO resigned last week after an inquiry revealed that 200 billion euros ($235 billion) of payments had been moved through its Estonian branch over a period of eight years, many of which the bank said were suspicious.
The case is a risk for Denmark’s entire financial sector, the Systemic Risk Council, which monitors threats to the stability of the country’s financial system, said on Tuesday.
It advised the government to double the cash cushion financial firms must hold to protect against economic shocks, to 1 percent of risk-weighted exposure, partly because of the Danske Bank case and partly because of increasing risks in banks’ overall lending.
“The Danish financial system is highly affected