identified outlier banks. On the basis of – mainly – published financial statements for a large group of banks, we have been able to point out those that achieved the lowest scores for selected key ratios, such as excess capital adequacy, high lending growth, large exposures and earnings capacity. Using this simple method, we sought to identify potentially vulnerable banks.
Subsequently, we have concluded that virtually all of the banks within this group that have actually become distressed had been identified beforehand using this relatively simple method. The Danish Financial Supervisory Authority was aware of this and included it in its supervisory activities.