Report on thematic inspection of housing finance approvals at AL Sydbank A/S

Inspection Report 30-04-2026 The Danish Financial Supervisory Authority conducted an inspection in February 2026 of AL Sydbank A/S’s approvals for private customers’ purchase and financing of owner-occupied and cooperative apartments. The purpose of the inspection was to assess the bank’s financing of private customers’ purchase of owner-occupied apartments and the takeover of financing from other banks. If banks approve loans that customers cannot afford, this will in many cases result in losses for both the customer and the bank.

The Danish Financial Supervisory Authority reviewed samples of a total of 49 approvals. 20 in growth areas and 29 outside growth areas. The approvals were selected for customers with a high debt ratio and loan-to-value ratio, as well as a bank exposure greater than DKK 200,000.

Summary and Risk Assessment

The bank has initiated an update of both its credit policy and business processes and job descriptions, so that the merged institutions in AL Sydbank A/S (Sydbank A/S, Aktieselskabet Arbejdernes Landsbank and Vestjysk Bank A/S) will in the future operate under a single set of governance documents.

The Danish Financial Supervisory Authority reviewed the approval basis for 49 selected approvals.

Two of the bank’s approvals were not sound, as the customers’ finances at the time of approval were not assessed as sufficiently robust. Both approvals involved customers with a fragile and vulnerable financial situation and excessive risk relative to a lack of liquid assets and wealth. The bank had itself identified the approvals prior to the review and agreed with the conclusion.

In total, one or more errors and deficiencies were found in 18 of the 49 reviewed approvals. The identified errors and deficiencies included approvals that were not updated with correct information and approvals that generally appeared relatively insular and lacked commentary on several matters.

The approval review also identified cases where the calculation of customers’ disposable income was insufficient, as well as cases where the customer’s future finances after housing financing were not adequately calculated.

There were also errors in the bank’s data basis for identifying “buy-before-sell” approvals.

The bank has been issued an order to ensure that sound and comprehensive decision-making basis is prepared, which includes a correct assessment of customers’ disposable income and future finances, and ensures that the basis for approvals is not flawed [1].

The inspection did not give rise to a change in the bank’s solvency requirement.

[1] Cf. Annex 1, No. 16 of the Executive Order on Management.

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