Region

Jurisdiction

Regulator

2026-04-30

Report on Inspection at Nykredit Realkredit A/S

The Danish Financial Supervisory Authority issued an inspection report on Nykredit Realkredit A/S mandating corrective actions regarding its handling of mortgage lending to properties with limited buyer pools and alternative use cases. The regulator found that Nykredit's credit policies, business processes, and management reporting inadequately address the heightened collateral risks, lack explicit identification criteria, and fail to align approval decisions with actual customer equity and property valuation discrepancies. Consequently, the Authority has ordered the institution to implement comprehensive policy updates, enhance risk identification procedures, and ensure management reporting accurately reflects the volume and compliance status of these high-risk exposures.

Denmark

Finanstilsynet Denmark

Inspection Report 30-04-2026

In November 2025, the Danish Financial Supervisory Authority (Finanstilsynet) conducted an inspection at Nykredit Realkredit A/S (Nykredit). The inspection covered lending to properties with a limited buyer pool due to limited alternative use possibilities. Lending in this area represents a very limited share of the group's total mortgage lending.

The Danish Financial Supervisory Authority reviewed, among other things, relevant policies, business processes, and reporting. The Authority also reviewed a sample of 30 exposures involving lending to properties with a limited buyer pool due to limited alternative use possibilities.

Summary and Risk Assessment

The inspection aimed to examine how Nykredit handles lending to properties with a limited buyer pool due to limited alternative use possibilities. When granting loans, assessing the customer's ability and willingness to repay the loan is central. However, when assessing property lending, it is also crucial that the proceeds from a sale of the property can cover the loan if the customer defaults on repayment. Lending to properties with a limited buyer pool due to limited alternative use possibilities is therefore associated with a specific risk, as there may be greater uncertainty regarding the collateral's value and, consequently, whether that value can cover the remaining loan balance upon realization of the collateral.

Nykredit's credit policy and business processes do not sufficiently address the increased risk and risk appetite regarding properties with a limited buyer pool due to limited alternative use possibilities. The restrictive instructions are further reflected in the sample's approvals, which as a default do not explicitly address whether the lending concerns properties with a limited buyer pool due to limited alternative use possibilities.

There is only a limited description provided to the organization regarding the identification of properties with a limited buyer pool due to limited alternative use possibilities. This creates a risk that properties will not be correctly identified.

Nykredit's management reporting contains no information on the volume and development of loans secured by real estate with limited alternative use possibilities. Furthermore, the management reporting does not address whether the credit policy's restrictive guidelines for this area are complied with. Consequently, the management reporting does not provide a comprehensive overview of the credit risks associated with lending secured by properties with these characteristics.

Nykredit has been issued an order to ensure the above [1].

The sample shows that, with regard to lending to owner-occupied properties (domicile properties), there is no alignment between the credit policy's guidelines on assessing the customer's actual equity and the approval basis for the exposures. The credit approvals fail to address the significance of larger discrepancies between Nykredit's valuations of mortgaged owner-occupied properties and their book values. Nykredit has been ordered to ensure that the decision-making basis for approvals takes this into account [2].

[1] Cf. Section 9, subsection 1, Section 12, and Annex 1, item 2, letter k), item 3, letter h), item 18, and items 39-40, in Executive Order No. 1103 of 30 June 2022 on the management and control of credit institutions, etc., and subsequent amendments.

[2] Cf. Annex 1, item 18, letter a), point iv., in Executive Order No. 1103 of 30 June 2022 on the management and control of credit institutions, etc., and subsequent amendments.

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