DENMARK - A draft law giving Denmark's giant ATP pension fund limited powers to run banking and credit operations through subsidiaries has crossed the latest legislative hurdle.
But the country's bankers say the proposed act is unacceptable and breaches principles of fair competition.
Denmark's Ministry of Economics and Business Affairs said the draft law on ATP was now ready for submission following the consultation period.
The new law will give ATP - and LD - the go ahead to acquire a controlling interest in banks and credit businesses, but includes certain limits, including a stipulation that ATP units may not have more than a 5% share of the loans market.
The limits were included in the proposal to allay competition concerns.
The Danish Bankers' Association said the proposed legislation was "highly unsatisfactory" and opened the way for permanently state-owned enterprises to put pressure on the market in an anti-competitive way.
But Brian Mikkelsen, minister for Economics and Business Affairs, said: "With the latest adjustments, we have found a good balance between the considerations of competition, financial stability and confidence in the financial institutions."
He said the public consultation had given rise to some clarifications in the proposal.
In its statement, the ministry said: "It has now been clarified that the general 5% ceiling corresponds to a limit of 7% for commercial loans to subsidiaries of ATP.
"At the same time, certain clarifications have been made regarding circumvention and market circumstances, whereby, for example, loans to subsidiaries, which are sold to ATP, count toward the ceiling on lending."
Jørgen Horwitz, director of the Danish Bankers' Association, hit out at the draft legislation, saying: "It is highly unsatisfactory that the government is creating the opportunity for permanently state-owned banks that can put pressure on the market by anti-competitive means."
As a minimum, the permission given should be time-limited, he went on.
ATP receives mandatory state funds, he said, and an ATP-owned bank would therefore be in a much better competitive position than other Danish banks.
"The proposal involves a completely unacceptable breach of competition principles," he said.
Apart from this, ratings agencies would no doubt put great value on ATP's ownership, Horwitz continued.
"The state guarantee will, therefore, give subsidiary banks conditions on the international credit markets that other banks cannot obtain," he said.
Other restrictions on ATP's banking and credit business through its units contained in the proposed law include a ban on selling administrative services to subsidiaries and on using the ATP name and logo for subsidiaries in the bank and credit sector.