action to be taken had not been laid down on beforehand, and denmark clearly lacked the tools to manage the situation. although the size of roskilde bank was not in itself sufficient to make it systemic, the turmoil in the financial markets meant that there was, in danmarks nationalbank ’ s assessment, a considerable risk of a knock - on effect on other banks. in the end, danmarks nationalbank and the rest of the banking sector purchased roskilde bank for zero kroner. in other words, the subordinated capital had been lost, and the private banks provided a guarantee of kr. 750 million to cover further losses. but as it turned out the losses were in fact far greater. a large number of danish banks became distressed in the period around the autumn of 2008. from the beginning of 2008 to the beginning of 2009, 18 danish banks were wound up, acquired or merged with other banks. all of these were small banks. with bank rescue package 3 of september 2010, a bank resolution scheme was established in denmark. the government - owned financial stability company was put in bis central bankers ’ speeches charge of the resolution of distressed banks, thereby assuming the role that danmarks nationalbank had had in connection with roskilde bank. under bank rescue package 3, not only shareholders, but also unsecured and subordinated creditors could lose their money if a bank failed. this was in accordance with international recommendations, but nevertheless caused a bit of a stir internationally, and led to a general downgrading of danish banks. the first bank to be wound up under bank rescue package 3 was amagerbanken – a regional bank based in the copenhagen area. i will not go into detail, but merely note that we now have a mechanism for handling distressed banks which works and which ensures, that taxpayers will not ultimately pay for a distressed bank. denmark was among the first countries to introduce a bank resolution scheme under which those who had lent money to the distressed bank could also lose their investment. this has made headlines, and i am surprised to note that even very small danish banks in distress still find their way to the pages of the financial times. recently it was a very small bank in the south of jutland, tønder bank. in my opinion that is out of proportion. over the weekend another local bank, sparekassen lolland, has been taken over by the larger jyske bank along the same lines, i. e. a private solution. it

bankers, bank supervisors, and policymakers, we should strive to work together to ensure that those risk - management processes are sufficiently robust and that they have been tested to ensure their effectiveness. a final word may be in order after so much discussion of the need to adopt more - sophisticated risk management at community banks. you have no doubt heard about the changes in capital processes being discussed in basel by the supervisors of the major industrial countries. these changes are being proposed mainly for the large, complex, internationally active banking organizations of the world, whose operations and business needs have developed beyond the intended reach of the current capital requirements. however, the capital and regulatory structures being developed in basel will not affect the rules under which most, if not all, of the banks in this room will operate. indeed, for most banks in this country, basel ii will have virtually no effect. i want to thank the north carolina bankers ’ association for the opportunity to speak to you today.