Order on Branches of Credit Institutions Authorized in Non-EU Countries Without Financial Agreements with the EU

Order on Branches of Credit Institutions, Which Have Been Granted Authorization in a Country Outside the European Union, with Which the Union Has Not Entered into an Agreement in the Financial Area 1)

Pursuant to Section 2, Paragraph 6, and Section 373, Paragraph 4, of the Act on Financial Business, cf. Act Consolidation No. 650 of 9 June 2025, as amended by Act No. 712 of 20 June 2025, the following is enacted:

Scope of Application

Section 1. This Order applies to undertakings covered by Section 2, Paragraph 1, of the Act on Financial Business.

Definitions

Section 2. In this Order, the following definitions apply:

1. Branch Accounts: A separate set of accounts kept for the branch, which covers risk exposures that can be attributed to the branch's activities, including liquid assets, as well as liabilities used to finance these assets.

2. Class 1 Branch: A branch that meets the conditions in Section 3, Paragraph 1.

3. Class 2 Branch: A branch that meets the conditions in Section 3, Paragraph 2.

4. Qualified Branch: A branch where the undertaking is established in a country listed in the European Banking Authority's register of qualified third countries.

5. Minimum Paid-in Capital: Adjusted capital requirement for branches, as determined in accordance with Section 12.

Preliminary Provisions

Section 3. A branch is classified as a Class 1 branch when any of the following conditions are met:

1. The total value of assets booked by or arising from the branch is equal to or greater than EUR 5 billion.

2. The size of the branch's deposits and other repayable funds is equal to or greater than 5% of the branch's total liabilities, or the size of such deposits and other repayable funds exceeds EUR 50 million.

3. The branch is not a qualified branch, cf. Section 2, No. 4.

Paragraph 2. Branches not covered by Paragraph 1 are classified as Class 2 branches.

Paragraph 3. Class 1 branches immediately become Class 2 branches when they no longer meet any of the conditions in Paragraph 1.

Paragraph 4. Class 2 branches become Class 1 branches 4 months after the date on which the branch began to meet one or more of the conditions in Paragraph 1.

Authorization and Notification

Section 4. The Danish Financial Supervisory Authority (Finanstilsynet) grants authorization pursuant to Section 2, Paragraph 1, of the Act on Financial Business when:

1. the requirements in Sections 10-14 are met,

2. the activities for which the undertaking applies for authorization in the branch are covered by the undertaking's authorization and subject to supervision in the relevant third country,

3. the undertaking has submitted the application to the supervisory authority in the undertaking's home country, and

4. there are no reasonable grounds to suspect that the third-country branch will be used to carry out or facilitate money laundering or terrorist financing.

Paragraph 2. The Danish Financial Supervisory Authority obtains an opinion from the authorities responsible for supervising the undertaking pursuant to the Money Laundering Act for the purpose of assessing the condition in Paragraph 1, No. 4.

Paragraph 3. Unless the branch is a qualified branch, the Danish Financial Supervisory Authority may reject an application from an undertaking authorized in a country outside the European Union, with which the Union has not entered into an agreement in the financial area, if Danish credit institutions do not have a corresponding right in that country.

1. The Order contains provisions implementing parts of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, OJ 2013, No. L 176, page 338, as amended by Directive (EU) 2024/1619 of the European Parliament and of the Council of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches and environmental, social and governance risks, OJ L of 19 June 2024.

Act Gazette A 2025 Published on 12 July 2025 2 July 2025. No. 1009. Ministry of Industry, Business and Financial Affairs, Danish Financial Supervisory Authority, ref. no. 24-009604 CQ003300

Paragraph 4. The Danish Financial Supervisory Authority may reject an application from an undertaking authorized in a country outside the European Union, with which the Union has not entered into an agreement in the financial area, if the branch is part of a group with a structure that prevents the implementation of effective supervision, effective exchange of information between competent authorities, or if it cannot be established how responsibility should be distributed among the competent authorities.

Paragraph 5. The Danish Financial Supervisory Authority may reject an application for authorization to establish a branch if the undertaking or its group does not meet the supervisory requirements applicable in the home country, or if it is likely that the undertaking or its group will breach these requirements within the next 12 months. The branch must immediately notify the Danish Financial Supervisory Authority if the conditions for rejecting an application for authorization under the first sentence occur.

Section 5. The undertaking must, in connection with the application for authorization to conduct credit institution business through a branch, send the following material to the Danish Financial Supervisory Authority:

1. A declaration that the undertaking is authorized in its home country, including how long the undertaking has conducted the notified business in the home country, and whether the undertaking has received supervisory responses from the home country's supervisory authorities within the last 3 years.

2. A declaration from the home country's supervisory authority that the planned activities are covered by the undertaking's authorization in the home country.

3. A description of the branch's business, including information on organization and planned activities.

4. A statement of the undertaking's capital position.

5. Indication of the branch's liquid assets, including asset type and location.

6. The branch's address.

7. The names of the branch's management and the person responsible for the risk management function.

8. Documentation that the conditions in Section 14 of the Act on Financial Business are met.

9. A business plan for the branch prepared in accordance with Sections 8 and 9.

10. The undertaking's annual reports for the last three financial years.

11. Information on whether the branch's depositors and investors are covered by any guarantee scheme in the undertaking's home country.

Paragraph 2. The Danish Financial Supervisory Authority may require that a translation of the attachments mentioned in Paragraph 1 be submitted.

Section 6. The Danish Financial Supervisory Authority may, cf. Paragraph 2, require that the branch conduct its activities in a subsidiary, which must have authorization pursuant to Section 7 of the Act on Financial Business.

Paragraph 2. The Danish Financial Supervisory Authority requires the establishment of a subsidiary if either:

1. the branch conducts cross-border activities to other countries within the European Union,

2. the branch is assessed to be systemically important and poses a significant risk to financial stability, or

3. the branch's assets exceed EUR 10 billion or the total value of assets amounts to or exceeds EUR 40 billion in all third-country branches within the European Union belonging to the same third-country group.

Paragraph 3. In assessing a branch's systemic importance pursuant to Paragraph 2, No. 2, account is taken of:

1. the branch's size,

2. the complexity of the branch's structure, organization, and business model,

3. interconnectedness with the rest of the financial sector,

4. substitutability of the activities, services, or operations carried out, or of the financial infrastructure made available by the branch,

5. the branch's market share in Denmark and in the European Union, with respect to assets related to credit institution business in total and as regards the activities, services, and operations it carries out,

6. the significance that the suspension or termination of the branch's operations or business is expected to have for the liquidity of the financial system, or for payment, clearing, and settlement systems in Denmark and in the Union,

7. the branch's role and significance in connection with the group's activities, services, and operations in Denmark and in the Union,

8. the branch's role and significance in connection with resolution or liquidation based on information from the resolution authority, and

9. whether the undertaking is attempting to circumvent requirements by establishing a branch instead of a subsidiary.

Paragraph 4. The Danish Financial Supervisory Authority may refrain from requiring the establishment of a branch pursuant to Paragraph 2, No. 2, if the purpose of the provision can be achieved by imposing one of the following on the branch:

1. Requirement for the branch to restructure its assets or activities in such a way that they cease to have systemic importance.

2. Requirement for the branch to cease posing an unnecessary risk to financial stability in Denmark or in the European Union.

3. Additional supervisory requirements.

Section 7. A branch with authorization pursuant to Section 2, Paragraph 1, of the Act on Financial Business may conduct business in this country through several business locations.

Business Plan

Section 8. As part of the application for authorization to conduct credit institution business through a branch, the undertaking must prepare a business plan for the branch. The business plan must be divided by quarters and cover the branch's first three financial years.

Paragraph 2. If the branch's first financial year is less than 12 months, the business plan must cover this period and the three following financial years.

Section 9. The business plan, cf. Section 8, Paragraph 1, must include the following:

1. The branch's business model.

2. Information on the nature of the risks or obligations that the undertaking intends for the branch to undertake.

3. Information on the branch's corporate governance.

4. An opening balance sheet, taking into account costs incurred for the establishment of the branch.

5. The expected accounting results in the form of income statements and balance sheets for the financial years covered by the business plan, cf. Section 8, Paragraph 2.

6. Statement on the branch's credit policy.

7. Statement on the branch's risk management procedures, including liquidity policy.

8. Information on the branch's internal audit systems, including information on the person responsible for this.

9. The branch's measures to combat money laundering, including information on the person responsible for this.

10. Control of outsourcing and other arrangements with third parties in connection with the activities carried out in the branch and covered by the institution's authorization.

11. The estimated costs for building up the branch's administration during the period covered by the business plan.

12. The estimated administrative costs excluding costs related to the building up of the administration, notably the ongoing general costs and commissions.

13. An estimate of future capital and liquidity requirements, cf. Section 12, Paragraph 1, and Section 13, Paragraph 1.

14. A recovery plan for the branch in accordance with Section 71a of the Act on Financial Business, which is sufficient and comprehensive for the branch's circumstances.

Management and Risk Management

Section 10. The branch must be managed by at least two branch managers, who must be approved by the Danish Financial Supervisory Authority in accordance with Section 64 of the Act on Financial Business. The branch must notify the Danish Financial Supervisory Authority of key persons in accordance with Section 64c, Paragraphs 1-4, of the Act on Financial Business.

Section 11. The branch's management must ensure that the branch has a risk management function and a risk officer in accordance with the provisions of the Order on Management and Control of Credit Institutions etc.

Paragraph 2. The branch must ensure that the undertaking's management body receives reporting on all significant risks and risk management policies.

Paragraph 3. The branch must ensure adequate internal control and have ICT systems that support the risk management system.

Paragraph 4. Branches that carry out back-to-back transactions or intra-group transactions must have sufficient resources to identify and manage their counterparty credit risk properly, where significant risks associated with assets booked by the branch are transferred to the counterparty.

Paragraph 5. If the undertaking performs the branch's critical or important functions, these must be performed in accordance with adopted internal arrangements or intra-group agreements.

Paragraph 6. An independent third party must regularly assess the branch's implementation and ongoing compliance with the requirements in Sections 10 and 11 and submit a report to the Danish Financial Supervisory Authority with the third party's findings and conclusions.

Capital and Liquidity

Section 12. Class 1 branches must have a minimum paid-in capital corresponding to at least 2.5% of the branch's average liabilities for the previous three annual reporting periods, but at least EUR 10 million.

Paragraph 2. Class 2 branches must have a minimum paid-in capital corresponding to at least 0.5% of the branch's average liabilities for the previous three annual reporting periods, but at least EUR 5 million.

Paragraph 3. For branches that do not have three annual reporting periods, the minimum paid-in capital is calculated in accordance with Paragraphs 1 and 2 based on the branch's liabilities at the time of granting authorization.

Paragraph 4. The minimum paid-in capital requirement may be met with the following assets:

1. Cash or cash-like instruments as defined in Article 4, Paragraph 1, No. 60, of the Regulation on prudential requirements for credit institutions and investment firms.

2. Debt instruments issued by central governments or central banks within the European Union.

3. Any other instrument that the third-country branch can use immediately and without restriction to cover risks or losses as soon as they arise.

Paragraph 5. The minimum paid-in capital must be deposited in a blocked account at a credit institution or a branch authorized in Denmark, which is not part of the undertaking's group.

Section 13. Branches must at all times have sufficient unencumbered liquid assets to cover their outgoing cash flows for a period of at least 30 days.

Paragraph 2. Class 1 branches fulfill Paragraph 1 by fulfilling the liquidity coverage requirement in Part Six, Section I, of the Regulation on prudential requirements for credit institutions and investment firms and in Commission Delegated Regulation (EU) 2015/61.

Paragraph 3. The liquid assets must be deposited in a blocked account at a credit institution or a branch authorized in Denmark, which is not part of the undertaking's group.

Paragraph 4. The branch must ensure that the liquid assets can be used in accordance with Section 54 of the Act on Restructuring and Resolution of Certain Financial Undertakings or in connection with the liquidation of the branch.

Paragraph 5. The Danish Financial Supervisory Authority may decide that a qualified branch is exempt from the requirement in Paragraph 1.

Accounting Reports etc.

Section 14. The branch must keep a comprehensive and accurate register of all assets and liabilities booked by or arising from the branch, and manage these assets and liabilities independently within the branch. The register must contain all necessary and sufficient information on the risks generated by the branch and how they are managed.

Paragraph 2. The branch must have a policy for registration systems that ensures compliance with Paragraph 1. The policy must clearly justify the registration systems and describe how these systems are in accordance with the branch's business strategy.

Paragraph 3. The policy must be approved by the undertaking's management body. The policy must be reviewed regularly.

Paragraph 4. The Danish Financial Supervisory Authority may require that the branch have an independent, written, and reasoned opinion prepared on the branch's registration systems. The Danish Financial Supervisory Authority must receive the opinion from the branch.

Section 15. The branch accounts must contain information on exposures that can be attributed to the branch's activities in Denmark, funds placed in Denmark, and the branch's group-external liabilities. At the same time as submitting the branch accounts, the branch must inform which guarantee scheme depositors and investors are covered by.

Paragraph 2. The branch accounts must be reported to the Danish Financial Supervisory Authority no later than 4 months after the end of the financial year.

Paragraph 3. The branch must, at the same time as submitting the branch accounts, cf. Paragraph 2, also report information on the branch's economic situation and the size of funds, calculated in accordance with Sections 12 and 13, as well as information on the branch's corporate governance and risk management procedures in accordance with Section 9, Paragraph 1, Nos. 3 and 7. The report must be certified by a state-authorized public accountant. The branch must send the recovery plan the branch is subject to at the same time as submitting the branch accounts.

Paragraph 4. The branch must submit accounting reports to the Danish Financial Supervisory Authority in accordance with forms and guidelines established by the Danish Financial Supervisory Authority pursuant to Section 198 of the Act on Financial Business.

Paragraph 5. The branch must submit reports to the Danish Financial Supervisory Authority on the business in accordance with forms and guidelines established by the Danish Financial Supervisory Authority pursuant to Section 198 of the Act on Financial Business.

Paragraph 6. The branch must without undue delay notify the Danish Financial Supervisory Authority of which employees are identified as key persons in relation to the branch's activities in accordance with Section 64c, Paragraph 3, of the Act on Financial Business.

Section 16. The branch manager must, no later than one month after the undertaking's annual report is finally approved, but no later than 5 months after the end of the financial year, submit the annual report with the audit opinion to the Danish Financial Supervisory Authority.

Exemption

Section 17. The Danish Financial Supervisory Authority may exempt from the provisions in Section 9, Paragraph 1, Section 15, Paragraphs 1 and 3-6, as well as from the provisions in Chapters 10-13 of the Act on Financial Business.

Withdrawal of Authorization etc.

Section 18. In addition to pursuant to Sections 223 and 224 of the Act on Financial Business, the Danish Financial Supervisory Authority may wholly or partially withdraw the undertaking's authorization to conduct business through a branch in this country if any of the following occurs:

1. The conditions for obtaining authorization, cf. Section 4, are no longer met.

2. The branch grossly neglects obligations pursuant to Section 5 or Sections 10-12.

3. The branch grossly neglects obligations pursuant to the Act on Financial Business and orders issued pursuant thereto.

4. The undertaking or its group does not meet the supervisory requirements applicable in the home country, or if it is likely that the undertaking or its group will breach these requirements within the next 12 months. The branch must immediately notify the Danish Financial Supervisory Authority if the circumstances in the first sentence occur.

5. The branch no longer meets any supplementary conditions or requirements, the fulfillment of which was a prerequisite for the granting of authorization.

6. The branch no longer provides guarantee to be able to fulfill its obligations to its creditors and especially no longer provides security for the funds entrusted to it by its depositors.

Paragraph 2. If the undertaking's authorization to conduct business in the home country is withdrawn, the branch managers must immediately notify this to the Danish Financial Supervisory Authority, which will then withdraw the branch's authorization.

Section 19. If the undertaking becomes bankrupt, enters liquidation, or is dissolved in any other way, the branch manager must immediately report this to the Danish Business Authority and the Danish Financial Supervisory Authority, which will arrange for the branch's dissolution.

Penal Provisions etc.

Section 20. In addition to the duties incumbent on branch managers or auditors pursuant to Section 374 of the Act on Financial Business, the Danish Financial Supervisory Authority may impose daily or weekly fines on the undertaking as a penalty, cf. Section 374, Paragraph 2, of the Act on Financial Business, if the branch fails to fulfill the duties incumbent on the branch towards the Danish Financial Supervisory Authority.

Section 21. Breach of Section 12, Section 13, Section 15, Paragraph 1, Section 18, Paragraph 2, and Section 19 is punishable by a fine.

Paragraph 2. Companies etc. (legal persons) may be subject to criminal liability pursuant to the rules in Chapter 5 of the Criminal Code.

Entry into Force

Section 22. This Order enters into force on 1 January 2027.

Paragraph 2. Order No. 1616 of 13 November 2020 on branches of credit institutions, which have been granted authorization in a country outside the European Union, with which the Union has not entered into an agreement in the financial area, is repealed.

Danish Financial Supervisory Authority, 2 July 2025 Louise Caroline Mogensen / Ri Kaarup