The "Development Package" has now come into force (Bank Package V)

Date 2 mar. 2012
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On 2 March 2012, the Danish government and the political parties Venstre, Dansk Folkeparti, Det Konservative Folkeparti and Liberal Alliance have concluded an agreement on a so-called “Development Package”. The Development Package is to improve small and medium-sized businesses’ access to funds, as this access has deteriorated during the financial crisis. The main content of the agreement, which is to be implemented by an actual regulation, is as follows:

Overview of the Measures

The Development Package may be divided into three areas:

  1. Demerger of the FIH Group, whereby the property portfolio is transferred to the Financial Stability Company A/S. The model creates a precedent for the Financial Stability Company’s possibility for handling similar situations.
  2. Creation of a Financial Institution for Agriculture (in the following “FIA”).
  3. Strengthening of growth and export financing.

Ad 1) Demerger of the FIH Group



In 2009 and 2010, FIH received individual government guaranteed loans for a total of DKK 42 billion. These loans are due in 2012 and 2013. In order to procure liquid funds to discharge these loans, FIH has liquidated a number of lending operations, which resulted in bankruptcies. In order to avoid negative spill-over effects of these liquidations, the Government and FIH has discussed possible solutions.  


The discussions resulted in a model where the Government through the Financial Stability Company takes over FIH’s property portfolio of DKK 16 billion. FIH will hive off the property portfolios to a separate company, after which this company will be sold to the Financial Stability Company at market value.


It is a term of the agreement that the new company as a starting point is to be liquidated or wound up as per 31 December 2016. All assets which have not been wound up before this date are to be sold in an open and transparent process.


In connection with the liquidation/winding-up of the new company, the Financial Stability Company will receive repayment of the purchase price which it has paid for the property company, inclusive of any capital infusions. FIH has provided an unlimited loss guarantee as collateral for the Government’s losses in case the activities, when wound up, result in a loss for the Financial Stability Company. 

If the winding-up of the activities results in a profit, it is agreed that the Government will receive 25% of such profit.

Precedential effect

Other financial institutions will be able to use the same model. The model will be available to other financial institutions on a case-by-case basis. The financial institutions must be in the same situation as FIH and must, among other things, be able to provide an unlimited loss guarantee.

Bank Package IV is revised in such a way that a concrete financial institution (Bank A), which is challenged with regards to available funds and which has a possible merger partner (Bank B), but cannot handle the challenge regarding available funds, may use the model. The FIH model allows Bank A to transfer the poor businesses to the Financial Stability Company with a view to winding-up, and thereafter be taken over by Bank B which will provide the Financial Stability Company with a loss guarantee.

Ad 2) Creation of a Financial Institution for Agriculture (FIA)



It is the assessment of the parties involved in the political accord that the agricultural sector has difficulties obtaining funding. In addition, the Financial Stability Company has not been able to sell overtaken, viable holdings to other financial institutions.


For that reason, a financial institution for agriculture is created. The FIA is to provide facility funding to holdings for effective entrepreneurs and new young farmers. The FIA is not to provide financing of operations which is still the financial institutions’ responsibility to provide.  


The agricultural businesses which the FIA assesses to be viable are to be taken over from the Financial Stability Company and other financial institutions. The agricultural businesses are only transferred if the farmer in question and his financial institution agree to this.

The capital base of the FIA is to be approximately DKK 300 million.

It is the intention that the FIA be established as soon as possible.


The rules for the FIA have not yet been laid down, but based on the purpose of the FIA, it must be assumed that it will now be easier for farmers to obtain facility funding.

Ad 3) Growth and Export Financing


The initiative consists of several minor focus areas which are described in the following:

Enlargement of the Export Loan Scheme (Eksportlåneordningen)

In 2007, in connection with the credit package, an export loan scheme under the Export Credit Agency (in the following “ECA”). The purpose was to support Danish businesses international competitive strength and to benefit Danish export in light of the financial crisis. The Finance and Appropriation Act of 2012 determines that it is possible to apply for loans until the end of 2015.

Until now, the Export Loan Scheme has had a credit facility of DKK 20 billion, but this facility is now enlarged by an additional DKK 15 billion, so that the Export Loan Scheme in total now disposes over DKK 35 billion.

The ECA’s capital band is maintained in order to continue to support the export

The ECA issues guarantees for Danish export businesses, and at the end of 2011, the total commitment was approximately DKK 65 billion. In order to counter the ECA having to reject Danish export companies due to the capital adequacy requirements, it was in 2010 decided temporarily to reduce the requirement regarding the free equity’s share of the total corrected guarantee responsibility – the capital band – after which it will gradually be stepped up. See the figure below.


The Development Package freezes the capital band at a 2012 level until 2015, so that the ECA has more means to provide as guarantee than there would have been had the existing schedule been used.

The initiative is carried out by a document from the Finance Committee, but does not imply further expenses for the Government.

Strengthening of the growth guarantee scheme by approximately DKK 550 million

Growth guarantee is a guarantee for financial institutions’ loans to small and medium-sized businesses which covers 75% of losses of funding of up to DKK 10 million and 65% of additional funding of up to DKK 25 million. All sectors have access to the growth guarantee scheme.

The Development Package sets aside an additional DKK 80 million for the coverage of losses on growth guarantees. The increased growth guarantees will support loans to business development by approximately an additional DKK 550 million.

It is the intention of the Development Package that the new means be targeted smaller growth guarantees, which is where the need at the moment is the greatest.

It will be possible for the Growth Foundation (Vækstfonden) to offer responsible loan capital within a limit of DKK 500 million

The Development Package creates a new scheme where it will be possible for the Growth Foundation to issue responsible loans to small and medium-sized businesses within a limit of DKK 500 million. The companies receiving responsible loans must at the same time have other loans from financial institutions of at least the same amount.

No collateral for the responsible loans will be provided, for which reason higher demands are instead made on the companies, the maturity of their products as well as the management of the companies. Furthermore, the interest rate will be relatively high – the rate has not yet been determined.

The scheme is to be adopted by an act amendment which will also describe the precise conditions for the offering of responsible loan capital.  

Involvement of the pension institutes in the funding of small and medium-sized businesses

The parties involved in the political accord state that the financial crisis and the tighter regulation of banks imply that the banks have tightened the credit granting. Therefore, the parties intend to supplement the banks’ funding to small and medium-sized businesses with new financial instruments through public-private partnerships (in the following “PPPs”). In PPPs, public authorities cooperate with private players in order to utilise both parties’ competencies in the best way. The parties involved in the political accord do not indicate concrete suggestions to PPPs in this connection.

In addition, the Development Package prescribes that a committee for the investigation and development of the new financial instruments is to be appointed. The committee is to submit a report in the autumn of 2012.

If you have any questions regarding the Development Package and funding in general or require additional information on the above, please contact partner Christoffer Galbo (, attorney Henrik Syskind Pedersen ( or junior associate Ted Rosenbaum (

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.