Pillar III

Pillar III includes a number of recommendations and requirements to increase and improve disclosure.

The requirements on disclosure build on the concept of materiality. Information would be regarded as material if its omission or misstatement could change or influence an assessment or decision of a user relying on that information. This definition is consistent with IFRS. It is up to the bank or financial institution to judge whether a piece of information is material or not.

The table below gives an overview of some of the disclosure requirements under Pillar III:

Area	Selected requirements
General	Banks should adopt a disclosure policy. The policy should state the frequency of disclosure and how compliance with the disclosure policy will be monitored The information should be disclosed at least once a year As far as possible, the information should be disclosed in one publication and through one channel The information should be broken down by asset class The goals and policies for the bank's risk management should be described
Capital	Information about shareholders' equity, its composition and deductions to it (e.g. goodwill) Description of the Internal Capital Adequacy Assessment Process (ICAAP) Statement of Risk Weighted Assets (RWA), solvency and minimum capital requirement Description of the models used for estimating credit risk, market risk and operational risk
Credit risk	Definition of default Description of methods used for value adjustments and provisioning Credit exposure broken down by geography, industry, time to maturity and counterparty
Market risk	Information about the characteristics of the internal model used Description of the approach used for stress testing and back testing of the internal model Reporting of aggregate Value-at-Risk (Var), high, mean and low VaR, over the reporting period
Operational risk	Approaches for the assessment of shareholders' equity The Standardised Approach is used for calculating the required capital The Group's Risk Management department is responsible for the process of gathering internal loss data, and reporting to business management and relevant Risk Committees

Danske Bank's future disclosure
Danske Bank's interactive report on risk and capital management fulfils many of the requirements mentioned above and the other requirements stated in the directive.

The interactive report will be further developed, and Danske Bank's aim is that it will be the medium used for complying with the requirements in Pillar III.

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Last updated/revised on January 31, 2008