TheBigBanks @TheBigBanks: "Santander Among Banks Set to..."

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Santander Among Banks Set to Win Approval for Danish Compromise 👉 $SAN.MC (Banco Santander SA) is among a group of banks set to receive European regulatory approval to hold less capital for risks at their insurance businesses. 👉 The European Central Bank is expected to soon grant a handful of banks permissions to apply an accounting treatment known as the Danish Compromise, according to people familiar with the matter, who asked to remain anonymous as the matter is private. 👉 $BBVA.MC (BBVA) is also among the firms likely to win approval for the measure, which allows banks to partially exclude their insurance units when they calculate their overall capital requirements, said some of the people. Spokespeople for the ECB, BBVA and Santander declined to comment. 👉 The update will mark an expansion of the Danish Compromise, which was created more than a decade ago and is currently used by a number of French, Belgian and Spanish banks. The treatment allows banks to free up capital to invest, lend more or pay out to investors. It also makes it more attractive for banks to own insurers, a business that they were already chasing to reduce dependence on lending revenue. 👉 A significant number of banks wanted permission to use the Danish Compromise after the European Union made the terms more attractive, said some of the people. $UCG.MI (UniCredit Commercial Bank) CEO Andrea Orcel said in September that he expected authorization for use of the Danish Compromise from the ECB in the fourth quarter. 👉 The lighter treatment can have a meaningful effect on banks’ capital ratios. Lenders calculate those ratios based on the riskiness of their assets. With the Danish Compromise, insurance businesses are subject to that approach, rather than being deducted from a bank’s equity. The benefit from using the treatment also improved, with assets held in that way now subject to a risk weighting of 250%, compared to 370% before. 👉 Names of banks that meet the criteria will be put to the watchdog’s Supervisory Board for a meeting next week, said one person. 👉 UniCredit has said applying the Danish Compromise after it internalized its life insurance business in Italy will boost its common equity Tier 1 ratio by 0.62% points. The lender’s CET1 ratio stood at 14.8% at the end of September, company filings show. 👉 Some banks, including Italy’s $BAMI.MI (Banco Bpm) and France’s $BNP.PA (BNP Paribas SA) , previously sought to apply the Danish Compromise when they acquired asset management businesses via their insurance businesses. The ECB disagreed in both cases. 👉 “Our interpretation is that it’s intended to be applied to the insurance sector and not to, for example, asset management undertakings,” Claudia Buch, who chairs the Supervisory Board, told Bloomberg in an interview in April. Read more ❓ www.bloomberg.com/news/articles/2025-11-27/santander-among-banks-set-to-win-approval-for-danish-compromise ✨ $SAN.MC , $BNP.PA and $UCG.MI are part of eToro’s @TheBigBanks Smart Portfolio. This portfolio offers a diversified allocation across a multitude of financial sectors, including banks and financial institutions. @TheBigBanks is part of eToro's Smart Portfolios series, which covers innovative themes as well as more traditional sectors, and is available from a $500 minimum investment. Your capital is at risk. Past performance is not an indication of future results.