3 October 2023
Risk appetite in financial markets has increased based on expectations of a soft economic landing. The risk outlook is still characterised by high inflation and higher interest rates, which, together with the slowdown of economic growth in Denmark, are expected to weaken the resilience of some households and companies.
The Council assesses that there are still unaddressed systemic risks related to the commercial real estate market. During the financial crisis loans to commercial real estate companies were one of the areas with the highest losses, and distressed banks had a relatively high concentration of properties. The currently higher interest rates contribute to higher costs in the commercial real estate sector, which increases the risk of losses on loans. The Council recommends that the Minister for Industry, Business and Financial Affairs activates a sector-specific systemic risk buffer for exposures to real estate companies at a rate of 7 per cent applicable from 30 June 2024.