Executive Order on Recovery Plans for Banks, Mortgage Credit Institutions, a Ship Financing Institution, and Investment Firms

Executive Order on Recovery Plans for Banks, Mortgage Credit Institutions, a Ship Financing Institution, and Investment Firms 1) In accordance with Section 71a, subsection 4, Section 71b, subsection 6, and Section 373, subsection 4, of the Financial Business Act, cf. Consolidated Act no. 432 of April 16, 2026, Section 98, subsection 4, Section 99, subsection 6, and Section 270, subsection 1, of the Investment Firms and Investment Services and Activities Act, cf. Consolidated Act no. 467 of April 26, 2026, and Section 5, subsection 2, and Section 14, subsection 2, of the Ship Financing Institution Act, cf. Consolidated Act no. 1542 of November 18, 2025, and Section 7 and Section 52, subsection 2, of Executive Order no. 668 of June 1, 2023, on a ship financing institution, the following is laid down and laid down by authorization pursuant to Section 1, no. 5, of Executive Order no. 44 of January 19, 2015, on the delegation of powers to the Danish Financial Supervisory Authority:

Section 1. This Executive Order applies to the following undertakings:

1. Banks.
2. Mortgage credit institutions.
3. A ship financing institution.
4. Investment firms that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, of the Investment Firms and Investment Services and Activities Act.
5. Financial holding companies, cf. Section 5, subsection 1, no. 9, of the Financial Business Act, when at least one subsidiary is a bank, a mortgage credit institution, or an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, of the Investment Firms and Investment Services and Activities Act.

Subsection 2. For the purposes of this Executive Order, an undertaking means the undertakings listed in subsection 1.

Content of the Recovery Plan and Simplified Recovery Plans for Certain Undertakings

Section 2. Recovery plans, prepared in accordance with Section 71a, subsection 1, and Section 71b, subsection 1, of the Financial Business Act and Section 98, subsection 1, and Section 99, subsection 1, of the Investment Firms and Investment Services and Activities Act, must be sufficient and comprehensive for the undertaking's individual circumstances.

Subsection 2. Banks that are not designated as systemically important, cf. Sections 308 or 310 of the Financial Business Act, and which are not designated by the Danish Financial Supervisory Authority pursuant to subsection 5, mortgage credit institutions that are not designated as systemically important, cf. Sections 308 or 310 of the Financial Business Act, and a ship financing institution, may omit parts that are not relevant to the undertaking. The undertakings must specifically state in the recovery plan why the omitted parts are not relevant to the undertaking.

Subsection 3. Banks designated by the Danish Financial Supervisory Authority pursuant to subsection 5 may prepare simplified recovery plans.

Subsection 4. Banks with a balance sheet of DKK 2 billion or less may fulfill the requirement to prepare a recovery plan by submitting the capital raising plan that the bank has prepared in accordance with Annex 1, no. 14, of the Executive Order on the calculation of risk exposures, capital base, and solvency needs. The capital raising plan must be supplemented with capital indicators, cf. Section 5, subsection 2.

Subsection 5. The Danish Financial Supervisory Authority shall, by June 30 each year, designate the banks that meet the requirements for applying simplified obligations, cf. Commission Delegated Regulation (EU) 2019/348 of October 25, 2018, supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for assessing the impact of an institution's failure on financial markets, other institutions, and financing conditions. A bank may apply simplified obligations if the bank has a quantitative score below 50 basis points according to the criteria in the Regulation.

Subsection 6. Investment firms may fulfill the recovery plan requirement in one of the following ways:

1. The Executive Order contains provisions implementing parts of Directive 2014/59/EU of the European Parliament and of the Council of May 15, 2014, establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU of the European Parliament and of the Council and Regulations (EU) No 1093/2010 and (EU) No 648/2012, Official Journal of the European Union 2014, no. L 173, page 190.

Official Gazette A 2026 Published on June 19, 2026 June 11, 2026. No. 536. Ministry of Taxation and Growth, Danish Financial Supervisory Authority, ref. no. 25-017839 DW000030

1. By preparing a recovery plan describing how the company would be able to carry out a solvent liquidation.
2. By preparing a capital raising plan in accordance with Annex 1, no. 14, of the Executive Order on the calculation of risk exposures, capital base, and solvency needs. The capital raising plan must be supplemented with capital indicators, cf. Section 5, subsection 2.

Subsection 7. The Danish Financial Supervisory Authority may decide to place an undertaking in a different category than indicated in subsections 2-6 if the complexity of the undertaking so requires. The Danish Financial Supervisory Authority's decision shall be made on the basis of Commission Delegated Regulation 2019/348/EU of October 25, 2018, supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for assessing the impact of an institution's failure on financial markets, other institutions, and financing conditions.

Merger Parties

Section 3. For banks not designated as systemically important, a recovery plan must include an overview of potential merger parties that the bank can contact if the bank enters recovery.

Scenarios of Severe Macroeconomic and Financial Stress

Section 4. The scenarios of severe macroeconomic and financial stress relevant to the undertaking, which must be included in the recovery plan, cf. Section 71a, subsection 1, no. 3, of the Financial Business Act and Section 98, subsection 1, no. 3, of the Investment Firms and Investment Services and Activities Act, must be designed in accordance with Annex 1.

Subsection 2. The scenarios must include events affecting the individual undertaking, events affecting the entire financial system, and one or more combinations of events affecting the individual undertaking and the entire financial system.

Subsection 3. For each scenario, it must be described which recovery measures the undertaking assesses would be appropriate, and it must be justified that the undertaking would be recoverable by applying the intended recovery measures.

Subsection 4. In a recovery plan prepared by a group, cf. Section 71b of the Financial Business Act and Section 99 of the Investment Firms and Investment Services and Activities Act, the group must also state for each scenario whether the group assesses that there are obstacles to the implementation of recovery measures in one or more of the undertakings covered by the recovery plan, and whether there are significant practical or legal obstacles to an immediate transfer of capital or to the repayment of liabilities or assets within the group.

Indicators

Section 5. The undertaking must, in the recovery plan, establish a number of quantitative and qualitative indicators that define the points in time when the undertaking must decide whether to initiate one or more of the recovery measures listed in the recovery plan.

Subsection 2. The indicators must be sufficient and appropriate for the undertaking's size, business model, strategy, and risk profile. Where the undertaking's indicators relate to requirements laid down in legislation, e.g., regarding capital or liquidity, the indicator must be set before the requirement laid down in legislation. In relation to indicators concerning legislative capital requirements, these must be applied consistently with the characteristics of the different requirements and the stress scenarios used.

Subsection 3. When establishing the indicators, the undertaking must include the indicators covered by Annex 2, Section A.

Subsection 4. When establishing the indicators, the undertaking must also include the indicators covered by Annex 2, Sections B and C, unless the undertaking assesses in the recovery plan that such indicators are not relevant to the undertaking concerned.

Subsection 5. When establishing the indicators, the undertaking may additionally include one or more of the indicators covered by Annex 2, Section D.

Subsection 6. An undertaking may, notwithstanding subsection 1, initiate recovery measures in accordance with the recovery plan in cases where a relevant indicator has not been breached, but where the undertaking finds it appropriate under the circumstances.

Section 6. Upon breach of an indicator, the undertaking must inform the undertaking's management within one working day. The undertaking must notify the Danish Financial Supervisory Authority of the breach of the indicator no later than one additional working day after the internal notification.

Subsection 2. Institutions that use several thresholds for the same indicator must state in the recovery plan at which threshold the Danish Financial Supervisory Authority must be notified.

Section 7. The undertaking must assess at least once a year whether the indicators should be changed, including whether more indicators should be added.

Section 8. The undertaking must be able to account to the Danish Financial Supervisory Authority for the process of establishing and continuously assessing the indicators, and the undertaking must be able to account for the effectiveness of the indicators.

Section 9. The undertaking must regularly monitor the indicators. The recovery plan must contain a description of when and how the undertaking's management must be informed of the results of the monitoring.

Subsection 2. The undertaking must, upon request from the Danish Financial Supervisory Authority, be able to provide the results of the regular monitoring of the indicators at any time.

Section 10. The undertaking must, without undue delay, notify the Danish Financial Supervisory Authority if the board decides to initiate recovery measures in accordance with the recovery plan, or if it decides not to initiate recovery measures in accordance with the recovery plan.

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Submission and Update of Recovery Plan

Section 11. Undertakings designated as systemically important must annually submit the recovery plan to the Danish Financial Supervisory Authority by October 1, cf. however, subsection 5.

Subsection 2. Undertakings covered by Section 2, subsection 2, must annually submit the recovery plan to the Danish Financial Supervisory Authority by November 1, cf. however, subsection 5.

Subsection 3. Banks covered by Section 2, subsection 3, must submit the recovery plan to the Danish Financial Supervisory Authority by November 1, 2028, cf. however, subsection 5. Thereafter, banks must submit the recovery plan every three years. The recovery plan must be received by the Danish Financial Supervisory Authority by November 1 of the relevant year, cf. however, subsection 5.

Subsection 4. Banks with a balance sheet of DKK 2 billion or less, cf. Section 2, subsection 4, and investment firms, cf. Section 2, subsection 5, must submit the recovery plan to the Danish Financial Supervisory Authority when the undertaking updates the recovery plan.

Subsection 5. Undertakings designated as systemically important and undertakings covered by Section 2, subsections 2 and 3, must, in addition to the times stated in subsections 1-3, update and submit the recovery plan to the Danish Financial Supervisory Authority if there are changes to the undertaking's business activities, financial situation, legal or organizational structure that are of significant importance for the recovery plan, or if the situation otherwise necessitates a change to it. Banks covered by subsection 3, which have submitted the recovery plan in accordance with the first sentence, must submit the next recovery plan by November 1 of the third year after this submission.

Subsection 6. The Danish Financial Supervisory Authority may decide that a recovery plan must be updated and submitted to the Danish Financial Supervisory Authority more frequently than indicated in subsections 1-3 if the Danish Financial Supervisory Authority deems it necessary.

Penal Provisions

Section 12. Violations of Section 2, subsection 1, Section 4, Section 5, subsections 1 and 3, Sections 6-10, and Section 11, subsections 1-4, may be punished with a fine.

Subsection 2. Companies etc. (legal persons) may be held criminally liable according to the rules in Chapter 5 of the Criminal Code.

Entry into Force

Section 13. This Executive Order enters into force on July 1, 2026.

Subsection 2. Executive Order no. 47 of January 16, 2023, on recovery plans for banks, mortgage credit institutions, a ship financing institution, and investment firms is repealed.

Danish Financial Supervisory Authority, June 11, 2026 Louise Mogensen / Ri Kaarup June 11, 2026. 3 No. 536.

Annex 1 Principles for the Design of Possible Scenarios

1. A recovery plan should include at least three possible scenarios to ensure coverage of an event affecting the entire financial system, an event affecting the individual undertaking or group (idiosyncratic event), and a combination of an event affecting the entire financial system and the individual undertaking or group.
2. Each scenario should be designed to meet each of the following requirements: a) The scenario must be based on events most relevant to the undertaking or group concerned, taking into account the undertaking's or group's business and financing model, activities and structure, size, or interconnections with other undertakings or with the financial system in general, and in particular any identified vulnerabilities or weaknesses in the undertaking or group. b) The events in the scenario risk causing the undertaking's or group's collapse unless recovery measures are implemented in a timely manner. c) The scenario must be based on events that are unusual but plausible.
3. Where relevant, each scenario must include an assessment of the impact of the events on the undertaking's or group's a) available capital, b) available liquidity, c) risk profile, d) profitability, e) operations, including payment and settlement operations, and f) reputation.
4. Reverse stress tests can be used to show what it would take for an undertaking's or group's business model to no longer be viable unless one or more recovery measures are successfully implemented. Reverse stress tests can be used as a starting point for developing the scenarios to be included in the recovery plan.

Possible Scenarios of Financial Difficulties 5) Taking into account the principle of proportionality, the number of possible scenarios should be proportionate to the nature, size, interconnections with other undertakings and with the financial system in general, and financing models of the undertaking or group. 6) At least one scenario should be included for each of the following types of events: a) A system-wide event, which is an event that can have severe negative consequences for the financial system and the real economy. June 11, 2026. 4 No. 536.

b) An idiosyncratic event, which is an event that can have severe negative consequences for a single undertaking, a single group, or an undertaking within a group. c) A combination of system-wide events and idiosyncratic events occurring simultaneously and interactively. 7) Systemically important institutions identified in accordance with Sections 308 or 310 of the Financial Business Act should include more than three scenarios. 8) The possible scenarios should include both slow and rapid adverse events. 9) Both system-wide events and idiosyncratic events should relate to events most relevant to the undertaking or group concerned as described in no. 2, letter a. The scenarios should therefore be based on events different from those referred to in nos. 10 and 11 if the latter are less relevant to the undertaking or group as stated in no. 2, letter a.

System-Wide Events 10) In designing scenarios based on system-wide events, the relevance of at least the following system-wide events should be considered: a) Failure of significant counterparties affecting financial stability. b) Decrease in available liquidity in the interbank lending market. c) Increased country risk and general capital outflows from a country in which the undertaking or group has significant activities. d) Adverse development in asset prices in one or more markets. e) Macroeconomic downturn.

Idiosyncratic Events 11) In designing idiosyncratic scenarios, the relevance of at least the following idiosyncratic events should be considered: a) Failure of significant counterparties. b) Damage to the undertaking's or group's reputation. c) Severe liquidity outflow. d) Adverse development in asset prices that particularly affect the undertaking or group. e) Severe credit losses. f) Losses due to operational risks. June 11, 2026. 5 No. 536.

Annex 2 Indicators in Recovery Plans

Section A Minimum list of mandatory categories of indicators in recovery plans:

1. Capital indicators
2. Liquidity indicators
3. Profitability indicators
4. Asset quality indicators

Section B Categories of indicators that must be included in the recovery plan, unless the undertaking assesses that the indicators are not relevant: 5. Market-based indicators 6. Macroeconomic indicators

Section C Indicators that must be included in the recovery plan, unless the undertaking assesses that the indicators are not relevant:

1. Capital indicators: a) Common Equity Tier 1 capital ratio b) Total capital ratio c) Leverage ratio d) Minimum requirement for own funds and eligible liabilities (MREL) and total loss-absorbing capacity (TLAC)
2. Liquidity indicators: a) Liquidity Coverage Ratio (LCR) b) Net Stable Funding Ratio (NSFR) c) Available eligible assets from the central bank d) Liquidity position (The institution's total liquid assets, regardless of whether they can be included in the LCR calculation and whether the assets can be pledged to the central bank or not.)
3. Profitability indicators: a) Return on assets or return on equity b) Significant operational losses
4. Asset quality indicators: a) Growth in loans in arrears or loans with repayment problems b) Coverage ratio (impairments in relation to impaired loans)
5. Market-based indicators: June 11, 2026. 6 No. 536.

a) Rating or ratings are under review or downgraded b) CDS Spreads c) Stock price variation 6. Macroeconomic indicators: a) GDP fluctuations b) Credit spreads on sovereign exposures

Section D List of any supplementary indicators (the list is not exhaustive and is for inspiration)

1. Capital indicators: a) Retained earnings and reserves / equity b) Negative information on the financial position of significant counterparties
2. Liquidity indicators: a) Concentration of liquidity and funding sources b) Total funding costs (via deposit-based and market-based funding) c) Average maturity of market-based funding d) Contractual maturity mismatch e) Cost of market-based funding
3. Profitability indicators: a) Operating costs / operating income b) General interest margin
4. Asset quality indicators: a) Loans in arrears or loans with repayment problems / equity b) Total loans in arrears or loans with repayment problems / total loans c) Growth in impairments on financial assets d) Geographical or sector concentration of loans in arrears or loans with repayment problems e) Exposures with credit forbearance / total exposure
5. Market-based indicators: a) Price to book value b) Undertaking's reputation or significant damage to reputation
6. Macroeconomic indicators: a) Ratings under negative review or downgrade on sovereign exposures b) Unemployment rate June 11, 2026. 7 No. 536.