EU’s bad bank hit by opt-out bid from Danes before even starting

As the European Union looks into creating a bad bank to help its troubled lenders clean up their balance sheets, it’s already clear that not all member states will back the plan.

The man running Denmark’s resolution agency, Financial Stability Co., says he sees no reason to join a framework that risks propping up lenders that would otherwise fail.

“It may be a good solution to use for the rest of Europe, but I don’t think it is something that we will use,” Henrik Bjerre-Nielsen, chief executive officer of the Copenhagen-based agency, told Bloomberg.

The European Banking Authority’s chairman has suggested that an EU-wide asset management company would be a way to take over and sell off soured loans that are stopping lenders from providing fresh credit. But the model risks protecting banks that should be allowed to fail, Bjerre-Nielsen said.

(Frances Schwartzkopff/Bloomberg)

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