danmarks · PDF filealbank’s work serves three overall purposes. ... Chairman per callesen hugo Frey Jensen. report oF the board ... when a period of 14 months without inter

danmarksnationalbank

RepoRtand accounts2013

danmarksnationalbankRepoRtand accounts2013

reportand accounts 2013

this report is based on information available up to 5 march 2014.

see also www.nationalbanken.dk

explanation of symbols:- magnitude nil0 less than one half of unit employed• Categorynotapplicable… data not availabledetails may not add up because of rounding.

issn (online) 1398-3830

contents

7 Foreword

report oF the board oF Governors

report oF the board oF Governors on the activities oF danmarks nationalbank

11 development in the real economy,

the exchange rate of the krone and the Financial markets

13 the stability of the Financial system

14 safe payments

orGanisation oF danmarks nationalbank

15 staff

16 management and organisation

17 danmarks nationalbank’s representation on committees,

in international organisations, etc.

19 organisation chart 1 march 2014

risk manaGement

20 Financial risk on portfolios

23 risks on monetary-policy counterparties

24 operational risk

accounts oF the year 2013

27 accounts

danmarks nationalbank RepoRt and accounts 2013 7

Foreword

danmarks nationalbank is the central bank of

denmark. it was established in 1818 and has

been a self-governing institution since 1936.

the legal basis for danmarks nationalbank’s

activities is the danmarks nationalbank act

of 1936. in its formulation of monetary policy,

danmarks nationalbank is independent of the

Folketing (parliament) and the Government.

the danmarks nationalbank act states that

danmarks nationalbank’s objective is to main-

tain a safe and secure currency system in den-

mark,andtofacilitateandregulatethetraffic

in money and the extension of credit. this

descriptionstillfitsthetasksofDanmarksNa-

tionalbank.Morespecifically,DanmarksNation-

albank’s work serves three overall purposes.

danmarks nationalbank contributes to stable

prices, to safe settlement of cash and electronic

paymentsandtothestabilityofthefinancial

system.

the report and accounts of danmarks nation-

albank comprise a presentation and descrip-

tion of danmarks nationalbank’s accounts for

the year 2013, and the report of the board

of Governors. the report on the activities of

danmarks nationalbank has been reduced

compared with previously and includes a de-

scription of danmarks nationalbank’s general

activities during the year in relation to mon-

etary and exchange-rate policy, the domestic

financialsystem,paymentsystemsandproduc-

tion of banknotes and coins. For more detailed

descriptions, reference is made to the publica-

tions and reports issued during the year and to

danmarks nationalbank’s website. the sections

on the organisation of danmarks nationalbank

and on risk management have not been altered

materially.

Copenhagen, 5 March 2014

lars rohde, Chairman per callesen hugo Frey Jensen

report oF the board oF Governors


report oF the board oF Governors on the activities oF danmarks nationalbank

development in the real economy, the exchanGe rate oF the krone and the Financial markets

danmarks nationalbank conducts monetary

policywithaviewtoensuringafixedexchange

rate against the euro. the main objective of

euro area monetary policy is to maintain stable

prices. keeping the krone stable against the

euro provides a framework for price stability in

denmark. monetary policy should be viewed in

conjunction with other economic policies, and

itisessentialtothefixed-exchange-ratepolicy

thateconomicpolicies,especiallyfiscalpolicy,

are stability-oriented.

in 2013, the danish economy was characterised

by further consolidation in the private sector

andweakeconomicgrowth.Inflationwasatthe

lowest level seen for many years and remained

below 1 per cent for most of the year. under-

lyinginflationarypressuresintheeconomy

were moderate. reductions of indirect taxes

and lower energy prices contributed to the low

inflationrate.

Following a decrease in 2012, the gross

domestic product, Gdp, rose by 0.4 per cent

in 2013. the economies of denmark’s most

important trading partners improved in 2013,

and exports rose by 1.0 per cent. domestic

demand, including business investment and

public consumption, picked up, while private

consumptionwasflat.Thelattershouldbeseen

against the backdrop of continued consolida-

tion in the private sector. the private-sector

savings surplus was 8.6 per cent of Gdp. at

the same time, there was a small government

deficit,sothatthecurrent-accountsurpluswas

just over 7 per cent of Gdp, which is well above

the average for the last 40 years. as regards the

housing market, house prices rose by 2.1 per

cent over the past year for denmark overall,

mainly driven by the copenhagen area and the

larger cities, while prices continued to recede in

other parts of the country.

the labour market showed signs of a re-

covery in 2013. employment rose in both the

private and public sectors, and gross unem-

ployment declined a little, to 5.6 per cent of

the labour force at year-end. wage increases in

industry remained unchanged at just over 1.5

per cent. this led to a positive development in

real wages and improved competitiveness.

throughout the year, danmarks national-

bank’s view was that although it was taking

some time for private-sector demand to nor-

malise,thefinancialconditionswerestrongly

expansionary, and hence there would neither

bescopenorneedforexpansionaryfiscalpoli-

cy in 2013 and 2014.

the krone exchange rate was very stable in

2013 and close to its central rate in erm ii, cf.

chart 1. danmarks nationalbank sold foreign

exchange for kr. 11.9 billion net in connection

with intervention in January 2013, but did

not intervene in the foreign-exchange market

during the rest of the year. this is the longest

period of non-intervention since may 1995,

12 danmarks nationalbank RepoRt and accounts 2013

exchange rate of the krone and intervention and monetary-policy interest rates chart 1

-40

-20

0

20

40

607.42

7.43

7.44

7.45

7.46

7.47

intervention purchases (right-hand axis)exchange rate of the krone (reverse scale)

kr. per euro kr. billion

2011 2012 2013-1

0

1

2

lending ratecurrent-account raterate of interest on certificates of depositdiscount rate

per cent

2011 2012 2013

note: intervention purchases are monthly observations of net purchases. daily observations of the exchange rate of the krone.source: danmarks nationalbank.

when a period of 14 months without inter-

vention ended. the foreign-exchange reserve

decreased by kr. 27.6 billion in 2013, to kr. 474.0

billion at year-end. besides intervention, the

fallalsoreflectsexchange-rateadjustmentsand

net redemption of foreign loans by the central

government in 2013.

danmarks nationalbank changed its inter-

est rates on two occasions in 2013. in January,

danmarks nationalbank unilaterally raised the

rateofinterestoncertificatesofdepositand

the lending rate by 0.10 percentage point to

0.10 and 0.30 per cent, respectively, following

sales of foreign exchange in the market. these

increaseswerereflectedinthemoney-market

interest rates, which rose correspondingly.

in early may, danmarks nationalbank re-

duced its lending rate by 0.10 percentage point

to 0.20 per cent in connection with the ecb’s

announcement that it would reduce its main

refinancingrateby0.25percentagepointto

0.50 per cent and its marginal lending rate by

0.50 percentage point to 1.00 per cent. the

ECBcitedfactorssuchasmoderateinflationary

pressures and weak economic activity in the

euro area as the reasons for its decision.

TheECBreduceditsmainrefinancingrate

and marginal lending rate by a further 0.25

percentage point in november, but kept the

interest rate on its deposit facility unchanged.

danmarks nationalbank kept its monetary-pol-

icy interest rates unchanged as the mone-

tary-policy counterparties have a large need to

deposit funds at danmarks nationalbank, and

hence the monetary-policy deposit rates deter-

mine the money-market interest rates and the

exchange rate of the krone. the rate of interest

oncertificatesofdepositwasnegativethrough-

out 2013, and danmarks nationalbank kept

the current-account rate and the discount rate

unchanged at 0.00 per cent during the year, cf.

chart 1.

the monetary-policy counterparties re-

deemed 3-year loans for kr. 43.5 billion, reduc-

ing the outstanding volume to kr. 9.6 billion

at end-2013. Following redemptions of 3-year

loans totalling around kr. 35 billion in may,

danmarks nationalbank reduced the overall

limit for the monetary-policy counterparties’

current-account deposits from kr. 101.1 billion

to kr. 67.6 billion with effect from 7 June.

money-markets in denmark and the euro

area showed signs of normalisation in 2013.

the spread between uncollateralised and

collateralised money-market interest rates was

stable, and the spread between collateralised

money-market interest rates in denmark and

the euro area was close to the monetary-pol-

icy spread. towards the end of the year, mon-

ey-market interest rates rose a little in the euro


area, partly as a result of premature redemp-

tions of loans under the ecb’s 3-year longer-

TermRefinancingOperations,LTROs,which

reduced excess liquidity among euro area

banks. as a result, the spread to the danish

money-market interest rates widened a little,

and the spread between denmark and the euro

area became more negative.

since the introduction of the negative rate of

interestoncertificatesofdepositinJuly2012

and the subsequent upward adjustment of

the current-account limits, the current-account

deposits of the banks and mortgage banks

have grown. the larger deposits have increased

the institutions’ scope for managing day-to-day

liquidityfluctuationswithoutresortingtothe

money market, which has reduced turnover in

the uncollateralised overnight money market.

irrespective of the lower turnover, there has

been a clear pass-through from the negative

rateofinterestoncertificatesofdepositto

short-term money-market interest rates and

hence the exchange rate of the krone.

in december, danmarks nationalbank an-

nounced that the collateral basis would be re-

stored to normal and the 6-month loan facility

discontinued from 1 July 2014. the background

isthatthefinancialmarketsandthesectorhave

stabilised and that use of the expanded bor-

rowing facilities at danmarks nationalbank has

been limited. monetary-policy counterparties

have been able to raise 6-month loans from

danmarks nationalbank since october 2011.

loans already raised will run until they mature.

at the same time, the list of assets eligible as

collateral for loans from danmarks national-

bank will be restored to normal. this means

that banks’ credit claims and sector company

shares will no longer be part of danmarks na-

tionalbank’s collateral basis from 1 July 2014.

danmarks nationalbank believes that the

credit institutions can handle these changes.

use of 6-month loans has been very limited,

and the assets to be removed from the collat-

eral basis have only to a modest extent been

pledged as collateral to danmarks national-

bank.

the stability oF the Financial system

danmarks nationalbank contributes to the

stabilityofthefinancialsystembyanalysing

thefinancialsector,monitoringandanalysing

systemic risks and making recommendations. in

addition, danmarks nationalbank oversees the

paymentsinfrastructureandproducesfinancial

statistics.

In2013,twopublicationsonfinancialstability

in denmark were issued, including assessments

ofthefinancialsystemandstresstestsofthe

capitalisation of the largest banks. in Finan-

cial stability, 2nd half 2013, danmarks nation-

albank’s assessment was that the banks are

currently resilient to severe macroeconomic

shocks. according to danmarks nationalbank’s

stresstestofthebanks’capitalisation,thefive

systemic banks comply with the capital re-

quirements in all scenarios and their common

equity tier 1 capital remains above 8 per cent,

which will be the most severe requirement in

the coming assessment of credit institutions

that will be subject to direct supervision by the

european central bank. the liquidity situation

ofDanishbanksisgood,asalsoreflectedinthe

premature redemptions of 3-year loans from

danmarks nationalbank.

danmarks nationalbank oversees that the

Danishpaymentsinfrastructureissafeandeffi-

cient and complies with international principles.

the focus of danmarks nationalbank’s over-

sight is on four systems that together make up

thecoreoftheDanishfinancialinfrastructure:

the payment system kronos, the retail payment

systems the sumclearing and the intradag-

clearing, and the vp system for clearing and

settlement of securities. in general, key systems

within the infrastructure operated satisfactorily

in 2013, but there were a few major incidents.

danmarks nationalbank maintains a current

dialogue with those responsible for the systems

to follow up such incidents. the overall conclu-

sions of danmarks nationalbank’s oversight are

presented in the annual publication Oversight

of the Financial Infrastructure in Denmark.


danmarks nationalbank also chairs and pro-

vides secretariat services to the systemic risk

council and the danish payments council. in

2013, the systemic risk council adopted a

recommendation to the danish government

to phase in capital requirements legislation in

denmark. the payments council published a

report on new payment solutions and launched

new statistics of payments.

in the area of statistics, danmarks nation-

albank is updating the existing collection and

production systems in order to keep abreast of

internationalstandardsandmanuals.Thefirst

phase was completed at the end of 2013, when

banksandmortgagebanksforthefirsttime

reported according to the updated require-

ments, with publication in early 2014. the new

manuals within other areas will be published

during 2014 and 2015. to support the analysis

offinancialstability,DanmarksNationalbank

is working with statistics denmark to develop

statistics based on detailed information about

the incomes, wealth and debts of individual

households. these statistics are expected to be

published from 2015.

saFe payments

danmarks nationalbank contributes to safe set-

tlement of cash and electronic payments. this is

done by issuing banknotes and coins with high

protection against counterfeiting and ensuring

that payments between banks can be settled

safelyandefficiently.

on the whole, settlement of interbank pay-

ments via kronos, danmarks nationalbank’s

system for large, time-critical payments, was

satisfactory in 2013, and participants had

ample liquidity to execute their payments. a

number of new, automated tools have been

introduced in kronos with a view to facilitating

the banks’ liquidity management for retail set-

tlement purposes.

danmarks nationalbank is also involved in

the work to modernise the danish payments

infrastructure so as to ensure faster settlement

of selected retail payments. in 2013, it became

possible to make credit transfers which are re-

ceived by the payee on the same day (intraday

transfers).

at end-2013, the value of banknotes and

coins in circulation was kr. 66.1 billion, which

was a small increase on 2012.1 the number of

banknotes decreased from 166 million in 2012

to 163.8 million in 2013.

the number of registered counterfeit bank-

notes rose from 437 in 2012 to 1,433 in 2013.

of these, 1,115 were found in circulation. the

remaining counterfeit banknotes are typically

found in connection with police searches. in

the preceding years, counterfeiters tended to

target the 1,000-krone banknote. in 2013 that

changed, in that the number of counterfeits

registered was higher for the 500-krone bank-

note than for the other denominations. in an

international context, counterfeiting of danish

banknotes remains limited.

the value of coins in circulation rose from kr.

5,760 million at end-2012 to kr. 5,810 million

at end-2013. in october, a full series of four

thematiccoinswithscientifictheoriesastheir

common motif was issued.

1 the value of banknotes and coins in circulation is stated exclusive of commemorative coins, Faroese banknotes and certain old banknotes andthereforedeviatesfromthefigurestatedonDanmarksNational-bank’s balance sheet.


orGanisation oF danmarks nationalbank

staFF

while the number of employees at danmarks

nationalbank rose in 2012, it was virtually un-

changed during 2013, standing at 562 at year-

end compared with 564 one year earlier. meas-

ured in full-time equivalents, the number was

529 at end-2013 (2012: 528). the staff turnover

rate was also stable, rising only slightly from 9.9

per cent in 2012 to 10.4 per cent in 2013. how-

ever, in reality the number of employees was

considerably lower at end-2013, cf. the section

below on staff reductions. if employees who

had been relieved of their duties before the

turn of the year – whether they had been given

notice of dismissal or had signed a severance

agreement – are excluded, the number was 526

rather than the stated 562.

at the end of 2013, danmarks nationalbank

employed 10 apprentices, mainly within cler-

ical work and it functions. this was the same

numberasoneyearearlier.Atfive,thenum-

ber of phd scholarships was also unchanged

compared with 2012. in 2013, danmarks na-

tionalbank repeated the trainee programme

for new graduates introduced in 2012, hiring

10 trainees on 6-month contracts. at the end of

theyear,fiveofthemwerestillemployed.

at end-2013, 19 of danmarks nationalbank’s

employees were on leave or secondment to

international or national institutions, including

the european central bank, ecb, the european

commission, the danish productivity commis-

sion and short-term assignments to e.g. other

central banks or the world bank. this was the

same number as in 2012. to encourage second-

ment to the ecb, danmarks nationalbank held

an information meeting with representatives of

the ecb before the summer. likewise, to raise

interest in working as an economist for the eu-

ropean commission, danmarks nationalbank in

march hosted an event initiated by the danish

ministry of Foreign affairs and djøf (profession-

al association for lawyers and economists) with

the participation of the minister for european

affairs, among others.

at 6.2 days per staff member overall, ab-

sence due to illness was lower in 2013 than

in the preceding years. exclusive of long-term

absence,thefigurewas4.7.Intheyearsbefore

2012, overall absence due to illness was typical-

ly 7-8 days.

staff Reductions

before the summer, danmarks nationalbank

embarked on an eu tender process to out-

source maintenance of its technical installa-

tions. seven employees could be affected by

this. at the end of the tender process, three

employees had transferred to the new service

provider, while two chose to retire and the re-

maining two had found other employment.

in october, negotiations within the frame-

work of the Joint consultation committee were

initiated in accordance with the danish col-

lective dismissal act. the background was an

overall assessment of danmarks nationalbank’s

coretasks,prioritiesandstaffing,aswellas

an assessment that the extraordinary pressure

on danmarks nationalbank in connection with


the board of Governors has three members.

the three governors are charged with the day-

to-day management of danmarks nationalbank

and hold full responsibility for the formulation

and ongoing adjustment of monetary policy.

as Governor by royal appointment, mr lars ro-

hde is chairman of the board of Governors. the

other two members, who are appointed by the

board of directors on the recommendation of

the committee of directors, are mr per callesen

and mr hugo Frey Jensen.

the Board of directors of danmarks nationalbank, 1 March 2014

box 1

chairman: Søren Bjerre-Nielsen, Chairman

deputy chairman: Helle Bechgaard, Director

elected by the Folketing for the period

ending 31 march 20161:

Kristian Thulesen Dahl, mp

Benny Engelbrecht, mp

Mike Legarth, mp

Ellen Trane Nørby, mp

John Dyrby Paulsen, mp

Lisbeth Bech Poulsen, mp

Lars Løkke Rasmussen, mp

appointed by the minister for business

and Growth for the period ending 31 march 2016:

Anne Kristine Axelsson,

permanent secretary, ministry of Justice

Michael Dithmer, permanent secretary, ministry of business and Growth

elected by the board of directors

for the period ending 31 march:

Bent Jensen, ceo 2014

Michael Møller, professor 2014

Lars Rebien Sørensen, ceo 2014

Helle Bechgaard, director 2015

Niels Fog, merchant 2015

Bente Sorgenfrey, president of

the confederation of professionals in denmark 2015

Hans Jensen, former president of

the danish confederation of trade unions 2016

Kirsten Nissen, former trade union president 2016

Peter Gæmelke, Farmer, former chairman

of danish agriculture 2016

Asger Enggaard, ceo 2017

Kjeld Johannesen, ceo 2017

Anja Philip, president of

the danish consumer council 2017

Søren Bjerre-Nielsen, chairman 2018

Niels Boserup, director 2018

Anne Hedensted Steffensen, ceo 2018

1. pending appointment by the Folketing of a replacement for

SofieCarstenNielsen,whoresignedwhenshewasappointed

minister.

thefinancialcrisiswaseasing.Asmallnumber

of employees chose to resign or to accept a

severance arrangement, and subsequently 28

employees were given notice of dismissal on 12

november 2013. these employees, who were

all relieved from their duties, were broadly

distributed across staff groups. the dismissals

werefinallydecideduponandeffectedatthe

end of november. the periods of notice will ex-

pire in the 1st half of 2014. the employees who

have been dismissed have been offered an out-

placement programme and other assistance.

GendeR equality at ManaGeMent level

at year-end, 61 per cent of the employees

were men, while 39 per cent were women. in

managerialpositions(employeesclassifiedas

assistant head of division or higher), women

made up 15 per cent (unchanged from the year

before).

in march, the board of directors of danmarks

nationalbank – in response to the decem-

ber 2012 amendment of the danish Gender

equality act – adopted targets for the under-

represented gender on the board of directors

and committee of directors. the aim is that,

by april 2017, the underrepresented gender

should constitute 40 per cent of the members

of the board of directors elected by the board

of directors, and 33 per cent of the similar part

of the committee of directors. at 31 december

2013, the share was 33 per cent for the board

of directors and 33 per cent for the committee

of directors.

at the end of the year, the board of Gover-

nors adopted a policy on equality at the mana-

gerial level, focusing on issues such as diversity

and recruitment – internally and externally. as

part of this focus, danmarks nationalbank in

the autumn began a process to formulate em-

ployer value propositions.

manaGement and orGanisation

danmarks nationalbank is a self-governing

institution managed by a board of directors, a

committee of directors and a board of Gover-

nors.


the committee of directors of danmarks nationalbank, 1 March 2014

box 2

chairman: Søren Bjerre-Nielsen, chairman

deputy chairman: Michael Dithmer, permanent secretary,

ministry of business and Growth

elected by the board of directors for the period ending

31 march 2014:

Søren Bjerre-Nielsen, chairman

Kristian Thulesen Dahl, mp

Michael Møller, professor

Kirsten Nissen, former trade union president

John Dyrby Paulsen, mp

appointed by the minister for business and Growth for

the period ending 31 march 2016:

Anne Kristine Axelsson, permanent secretary, ministry of

Justice

Michael Dithmer, permanent secretary, ministry of busi-

ness and Growth

the royal bank commissioner is the formal link

between the danish government and danmarks

nationalbank. the minister for business and

Growth, mr henrik sass larsen, is the royal

bank commissioner. mr søren bjerre-nielsen

is chairman of the committee of directors and

the board of directors.

oRGanisational chanGes

in 2013, organisational changes were intro-

duced with a view to adjusting the organisation

to future it systems, strengthening the work

withfinancialstability,ensuringamoreexpe-

dient distribution of tasks and streamlining

the operation of the danmarks nationalbank

building. market operations, customer trans-

actions and related analytical capacities were

brought together in one place, and the two

large it projects were placed in a separate pro-

gram organisation. the current organisation of

danmarks nationalbank is shown in the organi-

sation chart.

danmarks nationalbank’s representation on committees, in international orGanisations, etc.

as of 1 march 2014, danmarks nationalbank is

represented on or in the following committees,

international organisations, etc.:

the european union, eu

• European Systemic Risk Board, ESRB, the

General Board

Governor lars rohde is a member.

• The Economic and Financial Committee

Governor per callesen is a member.

the european central bank, ecb

• The General Council

Governor lars rohde is a member.

the international monetary Fund, imF

• Board of Governors

Governor lars rohde is the danish member.

• The Nordic/Baltic Monetary

and Financial Committee


the bank for international settlements, bis

Governor lars rohde represents danmarks

nationalbank.

the organisation for economic cooperation

and development, oecd

• The Economic Policy Committee


BEC

Governor hugo Frey Jensen

is an observer on the board of directors.

BKS Cash Service


is the vice chairman of the board of directors.

The Payments Council

Governor hugo Frey Jensen is the chairman.


Danish Ship Finance

Former governor Jens thomsen

is the chairman of the board of directors.

The Financial Council

assistant Governor Jens lundager is a member.

The Systemic Risk Council

Governor lars rohde is the chairman.


The Economic Council


The Coordination Committee

on Financial Stability


Nets Holding A/S


is a member of the board of directors.

VP Lux S.à r.l.

Former governor torben nielsen

is the chairman of the board of directors.

VP Securities A/S

Former governor torben nielsen

is the vice chairman of the board of directors.


orGanisation chart 1 march 2014

committee of directors7 members

auditbethina hamann

Board of Governors

financial MarketsJens lundager

Governor by Royal appointment,

chairmanlars rohde

Governorper callesen

economicsniels lynggård hansen

statisticsbent christiansen

Governorhugo Frey Jensen

Board of directors25 members

administrationkarsten biltoft

facility servicesJan thorndal

Banknotes and coinslars Gerrild sørensen

itJens dalsgaard

payment systemskristian kjeldsen

Banknote printing works and the Royal

danish MintJørgen strandgaard

Banking and MarketsFrank nielsen


risk manaGement

in its role as central bank, danmarks national-

bank is exposed to a number of risks. such risks

canbedividedintofinancialriskonportfolios,

risk on monetary-policy counterparties and op-

erational risk. in order to manage these risks,

guidelines, procedures and systems have been

set up to monitor and address the risks.

Financial risk on portFolios

danmarks nationalbank’s portfolios comprise

the foreign-exchange reserve and the domestic

securities portfolio.

in 2013, the foreign-exchange reserve de-

creased by kr. 28 billion to kr. 474 billion. the

foreign-exchange reserve is mainly invested in

the money market, central-bank deposits and

government bonds in euro and dollars.

the domestic securities portfolio of kr. 34

billion predominantly comprises mortgage

bonds,mostofwhicharefixedbulletswith

short maturities.

these portfolios expose danmarks nation-

albanktoanumberoffinancialriskssuchas

credit, market and liquidity risk. some risks

arerelatedtothefixed-exchange-ratepolicy,

which requires a large and liquid foreign-ex-

changereserve.OthersreflecthowDanmarks

nationalbank incurs risks in the expectation

of achieving a reasonable return. in 2013,

danmarks nationalbank introduced portfolio

management initiatives that are expected to

improve the relationship between risk and

return. exposure will be distributed on a range

of asset types, including equities, which gives

alargediversificationgain.DanmarksNa-

tionalbank expects a greater contribution to

earnings from these new measures, but also

largerfluctuationsinthefinancialreturnfrom

year to year.

cRedit Risk

the credit quality of danmarks nationalbank’s

portfolios is high. this supports high liquidity

in the foreign-exchange reserve, which must be

available for intervention, if required.

table 1 shows the exposure broken down by

credit rating. danmarks nationalbank is mainly

exposed to counterparties with high credit rat-

ings. in general, the maturities of bank deposits

are short – typically around one week – which

further reduces credit risk. the exposure with

ratings below investment grade (i.e. lower than

bbb-) is kr. 2 billion and comprises short-term

government securities issued by portugal and

ireland. the “no rating” category mainly com-

prises exposures to the imF, which is assessed

to have a high credit standing. with the current

portfolio, the probability that danmarks na-

tionalbank will suffer actual credit losses due to

default is very low.

MaRket Risk

the portfolios expose danmarks nationalbank

to losses resulting from changes in interest

rates, exchange rates, gold and equity prices.

the expected shortfall, measured as the

probability-weighted average of the 5 per cent

largest valuation losses over a 1-year horizon, is


credit exposure for danmarks nationalbank’s portfolios table 1

kr. billion 2012 total

bonds bank claims

centralbankdeposits and bis

Fx con-tracts imF

2013total

Govern-ment others1

collat-eralised2

uncollat-eralised3

aaa 241 34 55 - - 32 1 - 121

aa1-aa3 120 118 40 19 6 3 1 - 186

a1-a3 106 - - 161 7 0 1 - 168

baa1-baa3 2 0 1 - 0 - 0 - 2

ba1-ba3 3 2 - - - - - - 2

no rating 50 - 0 - - 0 1 20 21

total 2013 154 97 179 12 35 3 20 500

total 2012 124 101 103 4 165 4 21 522

note: the table shows the lowest credit rating given by Fitch, moody’s or standard & poor’s. moody’s scale has been used. it has more than 20 grades, aaa being the highest rating. year-end. intraday credit exposures have not been included. rounded numbers.source: danmarks nationalbank, Fitch, moody’s and standard & poor’s.1. securities with both explicit and implicit government guarantees, covered bonds, securities issued by German länder, danish bonds,

securities issued by supranational institutions (e.g. the eu, the european Financial stability Facility and the european investment bank) and securities issued by the bis.

2. collateralised bank claims are repurchase agreements. the collateral pledged in these transactions has high ratings.3. uncollateralised bank claims are deposits and correspondent accounts.

kr. 6.8 billion. that is equivalent to 11 per cent

of the net capital, cf. table 2.

interest-rate exposure

at end-2013, danmarks nationalbank’s bond

portfolio totalled kr. 250 billion, cf. table 2. it

is mainly invested in bonds issued by govern-

ments and supranational institutions in euro

and dollars, as well as danish mortgage bonds.

danmarks nationalbank’s interest-rate sensitivi-

ty, expressed as the krone duration1, was kr. 3.1

billion at the end of 2013.

Gold exposure

under the danmarks nationalbank act, dan-

marks nationalbank must hold a stock of gold.

since 1970, the gold stock has been virtually

constant in size. the gold stock is 66.5 tonnes

and had a value of kr. 13.9 billion at end-2013,

which is kr. 6.2 billion lower than at end-2012.

measured in kroner, this is the greatest percent-

age fall in the price of gold within one calendar

year since 1970. the decrease follows a period

1 the krone duration indicates the immediate change in value on a parallel shift in yields of 1 percentage point.

of surging gold prices. the value of danmarks

nationalbank’s stock of gold rose by kr. 13.2

billion from end-2005 to end-2012.

most of danmarks nationalbank’s market risk

still relates to the gold stock.

equity exposure

danmarks nationalbank has chosen to build up

an equity exposure. seen in an overall portfolio

perspective, this is expected to improve the

relationship between expected risk and return.

at end-2013, the exposure to stock futures was

kr. 2.6 billion. although equities are relatively

volatile, the expected shortfall is slightly lower

with an equity exposure than without due to

gooddiversificationproperties.

foreign-exchange exposure

the foreign-exchange reserve is invested in

severalcurrencies,butthefinalexposureis

predominantlyineuro.DuetoDenmark’sfixed-

exchange-rate policy, the exchange-rate risk

is low. investments in non-euro currencies are

swapped to euro via forward contracts.


selected exposure measures and key risk ratios table 2

kr. billion (unless otherwise indicated) 2012 2013

Gold exposure 20.1 13.9

interest-rate exposure

bond investments 225 250

euro area government bonds1 89 130

us treasury bonds1 42 49

other government bonds1 9 5

supranational institutions 40 20

other bonds2 13 13

danish bonds 33 34

krone duration 2.3 3.1

three largest counterparties, end-2013

German government3 55 62

us treasury4 45 52

French government4 35 48

equity exposure 2.6

eurostoxx 50 futures - 1.3

s&p 500 mini futures - 1.3

foreign-exchange exposure before (and after) hedging

eur 329 (475) 322 (451)

usd 126 (0) 118 (0)

other currencies 17 (0) 11 (0)

expected shortfall, 95 per cent, kr. billion 8.2 6.8

in per cent of net capital 12 11

Note: Roundedfigures.The95percentexpectedshortfallindicatestheexpectedlossonthefinancialpositions,giventhatthelossexceedswhat will, with a probability of 95 per cent, be the greatest loss. the loss is measured over a 1-year horizon. the expected shortfall has been cal-culated on the basis of observations from January 2001, with equal weighting of historical data (decay factor of 1). volatilities and correlations have been calculated on the basis of weekly data scaled up to the annual level.source: danmarks nationalbank1. including bonds with explicit and implicit government guarantees.2. German länder, German and swedish covered bonds.3. including bonds with explicit and implicit government guarantees, German länder and central-bank deposits.4. including bonds with explicit and implicit government guarantees and central-bank deposits.

liquidity Risk

the purpose of the foreign-exchange reserve

istosupportthefixed-exchange-ratepolicy.

in the management of the foreign-exchange

reserve it is important to ensure that a large

share of the reserve can readily be used for

intervention in support of the krone.

danmarks nationalbank operates with

high liquidity requirements in terms of the

foreign-exchange-reserve assets that must be

available or realisable within a given period of

time. most of the foreign-exchange reserve is

invested in the money market, in central-bank

deposits or in securities with high ratings,

which can be sold or pledged as collateral at

very short notice. in addition, danmarks na-

tionalbank can raise foreign exchange via vari-

ous borrowing programmes, such as the danish

government’s commercial paper programme.


risks on monetary-policy counterparties

danmarks nationalbank provides mone-

tary-policy loans and, to facilitate settlement of

payments, also intraday credit to danish banks

and mortgage banks. danmarks nationalbank

also provides banks with collateralised loans to

banknote holdings.2

in connection with its lending activities dan-

marks nationalbank incurs a risk of credit loss-

es. this risk is reduced by only providing loans,

including intraday credit, to monetary-policy

counterparties that have pledged adequate

collateral. danmarks nationalbank did not

suffer any losses on monetary-policy counter-

parties in 2013, and the risk of credit losses is

generally assessed to be very low.

BoRRowinG By MonetaRy-policy counteR-

paRties fRoM danMaRks nationalBank

total drawings by the monetary-policy counter-

parties on lending facilities and intraday credit

amounted to kr. 310.5 billion at end-2013,

which is twice as high as one year earlier. the

rise is not attributable to a higher borrowing

requirement, but to increased use of intraday

credit, cf. below.

both monetary-policy loans and loans to

banknote holdings have been reduced. at

end-2013, monetary-policy loans totalled kr.

23.1 billion, which was kr. 43.3 billion lower

thanin2012.Thisreflects,interalia,premature

redemptions of 3-year loans by several credit

institutions. monetary-policy counterparties

had borrowed kr. 2.4 billion for banknote hold-

ings at end-2013, compared with kr. 3.3 billion

at end-2012.

the counterparties’ use of intraday credit

at danmarks nationalbank for settlement of

payments rose by approximately kr. 200 billion

compared with end-2012. this is because the

new liquidity management tools introduced in

september 2013 allow counterparties to re-

serve “as much as possible”, i.e. to reserve their

2 the rules for use of these facilities have been laid down in the Gen-eral terms and conditions for monetary policy instruments and set-tlement of payments in danish kroner, swedish kronor and icelandic kroner at danmarks nationalbank.

entire available balance3 for night-time settle-

ment of payments. hence, the rise in intraday

creditreflectshigherexcesscoverinrelationto

payment obligations, not a larger borrowing

requirement on the part of the counterparties.

pledGinG of collateRal foR loans to

Banks and MoRtGaGe Banks

danmarks nationalbank requires collateral for

all types of lending, including intraday credit.

the collateral basis comprises danish secu-

rities, primarily government and mortgage

bonds, denominated in danish kroner or euro,

cf. table 3.

the banks’ credit claims of good quality are

also included in the collateral basis. in addition,

the collateral basis was temporarily expand-

ed to include e.g. sector company shares and

bonds during the crisis. in december 2013,

danmarks nationalbank announced that both

credit claims and the temporary facilities will

be phased out of the collateral basis in 2014, cf.

the report on the activities of danmarks nation-

albank.

Finally,certificatesofdepositissuedbyDan-

marks nationalbank can be pledged as collater-

al for intraday credit in kroner.

at end-2013 the collateral value, i.e. the value

after haircuts, of the banks’ and mortgage

banks’ collateral at danmarks nationalbank was

kr. 338.4 billion, cf. table 3. this should be seen

in relation to the total drawings on lending

facilities and current accounts, which amounted

to kr. 310.5 billion at the same time.

ManaGeMent of Risk of losses

although danmarks nationalbank’s lending is

fully collateralised via assets with a high cred-

it quality, losses may still occur if two events

coincide – the account holder defaults and the

realisation value of the collateral pledged turns

out to be lower than the credit granted. to min-

imise the risk of losses, valuation of the assets

in the collateral basis takes place regularly, in

most cases on a daily basis. in addition, dan-

3 the available balance is the value of the credit institution’s collateral and current-account balance less the value of monetary-policy loans and loans for banknote holdings.


collateral value of the banks’ and mortgage banks’ collateral table 3

kr. billion end-2013 end-2012

Government securities 0.2 0.5

mortgage bonds1 149.1 169.2

other bonds2 10.2 3.9

collateral in the form of securities 159.5 178.6

credit claims 6.8 8.4

temporary collateral basis3 5.7 2.3

Certificatesofdeposit 166.4 182.3

total collateral 338.4 371.6

note: the collateral value has been calculated net of haircuts.source: danmarks nationalbank.1. mortgage bonds, covered bonds (sdo) and covered mortgage bonds (sdro).2. bonds guaranteed by the danish government, bonds issued by kommunekredit, danish ship Finance and Føroya landsstýri and junior

covered bonds issued in connection with sdos or sdros.3. sector company shares and government-guaranteed uncollateralised debt issued by credit institutions.

marks nationalbank applies haircuts, including

valuation haircuts, to cover the risk that the

market value of the securities declines in the

period from the counterparty’s default until the

securities have been realised.4

operational risk

to ensure compliance with the ds 3999 security

standard, major security upgrades took place

at danmarks nationalbank in 2012 and 2013.

the process was completed in december 2013

and affected several aspects of the danmarks

nationalbank building, as well as other security

aspects. For example, security was enhanced in

the banknotes and coins department.

4 For a more detailed description of risk management, see danmarks nationalbank, report and accounts 2012.

accounts oF the year 2013


Profitandlossaccount(kr.million) 2013 2012 2011 2010 2009

net income from interest 3,221 3,834 4,265 3,546 2,760value adjustments -9,166 637 835 4,567 1,751income from shares, etc. 132 122 74 129 126other income 123 60 165 12 24expenses, including depreciation -629 -592 -606 -581 -706other expenses - -19 - -19 -

Profit/loss for the year -6,319 4,042 4,733 7,654 3,955

allocated as follows: allocation to net capital -7,742 2,339 2,394 5,493 2,412payable to the central government 1,423 1,703 2,339 2,161 1,543

-6,319 4,042 4,733 7,654 3,955

balance sheet (kr. million) 2013 2012 2011 2010 2009

assetsForeign-exchange-reserve assets 477,120 504,329 495,275 431,856 398,804monetary-policy lending 23,145 66,401 24,010 9,275 104,220other lending 2,475 3,347 4,091 4,099 3,749domestic bonds 33,960 34,093 33,669 32,609 33,093other assets 10,525 20,379 12,759 8,305 10,285

total assets 547,225 628,549 569,804 486,144 550,151

liabilitiesbanknotes and coins 66,491 65,805 62,407 62,541 60,760monetary-policy deposits 227,358 286,671 173,159 147,067 188,294central government 163,376 163,694 225,849 179,443 212,435Foreign-exchange-reserve debt 3,125 2,685 3,378 3,134 4,257other liabilities 23,915 38,992 36,648 27,990 23,929

total creditors 484,265 557,847 501,441 420,175 489,675

total net capital 62,960 70,702 68,363 65,969 60,476

total liabilities 547,225 628,549 569,804 486,144 550,151

Financial ratios 2013 2012 2011 2010 2009

Foreign-exchange reserve (kr. million) 473,995 501,644 491,897 428,722 394,547

net position of banks and mortgage banks vis-à-vis danmarks nationalbank (kr. million) 204,213 220,270 149,149 137,792 84,074Growth in banknotes and coins (per cent) 1.0 5.4 -0.2 2.9 -0.9change in net capital (per cent) -11.0 3.4 3.6 9.1 4.2

change in net capital excl. value adjustment reserve (per cent) 2.5 3.1 3.0 1.8 1.3

average no. of staff (full-time equivalents) 528 518 505 510 508

key FiGures and Financial ratios 2009-13


board oF Governors’ report on danmarks nationalbank’s accounts

The Accounts for 2013 have been prepared in

accordance with the accounting policies applied

in the previous year, cf. Accounting Policies.

The Accounts reflect that Danmarks Natio-

nalbank issues banknotes and coins, holds the

foreign-exchange reserve, and functions as ban-

ker to the banks and mortgage banks and to the

central government.

The result for the year shows a loss of kr.

6,319 million compared with a profit of kr. 4,042

million in 2012. In 2013, the balance sheet de-

creased by kr. 81.3 billion to kr. 547.2 billion, of

which the decline in the foreign-exchange reserve

amounted to kr. 27.6 billion.

No credit losses were registered on Danmarks

Nationalbank’s exposures to monetary-policy

counterparties or other external investments in

2013, and it is not deemed to be necessary to

make provisions for such losses at year-end.

the result for the year was particularly affected

by negative value adjustments, primarily on

gold, and sustained low interest rates on a num-

ber of danmarks nationalbank’s investments.

the price of gold dropped sharply in 2013, and

the value adjustment of danmarks national-

bank’s gold stock consequently caused a loss

of kr. 6,234 million.

under the current principles for the distribu-

tionofprofits,positivevalueadjustmentsare

allocated to the value adjustment reserve and

negative value adjustments are covered by the

value adjustment reserve, to the extent that

this is possible.

the development in the value adjustment

reserve has mainly been driven by the devel-

opment in the price of gold, cf. chart 2. in the

period 2004-12, a total of kr. 14.9 billion rela-

ting to gold was allocated to the reserve.

hence, the loss in 2013 caused a major drain

on the value adjustment reserve, which was

also affected by value adjustment losses on

both the remaining foreign-exchange reserve

and the domestic securities portfolio, cf. the

section below.

the drop in the price of gold also affects the

value of the foreign-exchange reserve, as gold

forms part of that reserve1.

the foreign-exchange reserve amounted to kr.

474.0 billion at end-2013, having declined by

kr. 27.6 billion relative to 2012. this decline is

attributable to a combination of the central

government’s net redemptions on loans in

foreign currency, intervention and negative

value adjustments.

market-value adjustment of the foreign-ex-

change reserve was negative by kr. 2,460 milli-

on compared with a negative adjustment of kr.

1,738 million in 2012. market-value adjustment

mainly comprises negative adjustments becau-

se the aggregate market value of the bonds ex-

ceeds their redemption value (nominal value),

1 in addition to gold, the foreign-exchange reserve consists of the accounting items “Foreign assets”, “claims on the imF” and “Foreign liabilities”.


which means that losses will be incurred as the

redemption date approaches (mathematical

price adjustment).

Foreign assets are predominantly inve-

sted in euro. in addition, some are invested

in dollar-denominated assets. the exchange

rate between kroner and euro has been virtu-

ally unchanged during the year. positive value

adjustments amounting to kr. 21 million were

posted in 2013. in 2012, a strengthening of the

euro against the krone led to a positive value

adjustment of kr. 1,711 million.

interest rates in the money markets were

periodically negative in 2012, resulting in a

reallocation of the foreign-exchange-reserve

portfolios2.Tensionsinthefinancialmarkets

are gradually easing, however, and in 2013,

danmarks nationalbank converted e.g. cen-

tral-bank deposits, mainly to repo transactions

with foreign bonds as collateral. as a new featu-

re in 2013, danmarks nationalbank also chose

to build up exposure to stock futures, because,

seen from an overall portfolio perspective, the

equity exposure is assessed to improve the

2 report and accounts 2012, page 40.

relationship between risk and return. return on

the investment appears as value adjustments.

the combination of a sustained low level of

interest rates and a foreign-exchange reserve

that is lower on average than in 2012 caused a

decline in interest income on the reserve from

kr. 3,186 million in 2012 to kr. 2,258 million in

2013.

overall, this meant that the contribution from

the foreign-exchange reserve, excluding gold,

to the result for the year was negative by kr.

181 million, compared with a positive contribu-

tion of kr. 3,159 million in 2012.

the counterpart of the foreign-exchange reser-

ve is liabilities that are primarily made up of the

net position vis-à-vis the banks and mortgage

banks3 and the balance on the central govern-

ment’s account at danmarks nationalbank.

in 2013, average net deposits from banks

and mortgage banks amounted to kr. 198 bil-

lion. the net position accrues interest at dan-

marks nationalbank’s rates of interest, which

3 the banks’ and mortgage banks’ net position vis-à-vis danmarks nationalbank appears as the value of the accounting items “net cur-rentaccountsandsettlementaccounts”,“Certificatesofdeposit”and“monetary-policy lending”.

correlation between developments in the stock of gold and the value adjustment Reserve

chart 2

0

5,000

10,000

15,000

20,000

25,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

stock of gold value adjustment reserve

kr. million

source: danmarks nationalbank.


remained historically low in 20134. the rate of

interestoncertificatesofdepositswasnegative

throughout 2013.

as a result of this development, danmarks

nationalbank had net interest income of kr. 246

million. of this, interest income from deposits

basedoncertificatesofdepositissuedamount-

ed to kr. 168 million, cf. table 4.

the development in the accounts with banks

and mortgage banks was also characterised by,

inter alia, redemptions of the 3-year loans and

reduction of the current-account limits. overall,

the banks’ and mortgage banks’ net position

vis-à-vis danmarks nationalbank decreased by

kr. 16.1 billion to kr. 204.2 billion.

with a balance of kr. 163.4 billion at end-

2013, the central government’s account remai-

ned largely unchanged relative to 2012. the

balance accrues interest at the current-account

rate, which was 0 per cent throughout 2013. in

2012, an expense of kr. 220 million was recor-

ded.

domestic bonds are placed in danish mortga-

ge bonds and yielded total interest income of

kr. 762 million compared with kr. 872 million

in 2012. moreover, the portfolio generated a

market-value adjustment loss of kr. 514 million

compared with a loss of kr. 105 million in 2012.

4 since mid-2013, the lending rate has been 0.2 per cent, the cur-rent-accountrate0.0percentandtherateofinterestoncertificatesof deposit -0.1 per cent.

domestic bonds thus contributed kr. 249 milli-

on to the result for the year compared with kr.

767 million in 2012.

as in previous years, danmarks nationalbank

has received dividend from several of the sha-

reholdings. overall, value adjustment of shares

and dividend received contributed a gain of kr.

152 million to the result for the year.

banknotes and coins in circulation increased by

kr. 0.7 billion compared with end-2012.

banknotes and coins in circulation can be

seen as an interest-free loan to danmarks nati-

onalbank, and the resulting interest income is

known as seigniorage. due to the low level of

interest rates, the seigniorage contribution to

earnings is very limited.

danmarks nationalbank incurred other opera-

ting expenses of kr. 507 million. this amount is

net of other ordinary income of kr. 123 million.

in 2013, danmarks nationalbank decided to

embark on a process to reduce its staff by al-

most 10 per cent. the reason is that the extra-

ordinary demands on danmarks nationalbank’s

resourcescausedbythefinancialcrisisaredi-

minishing, enabling danmarks nationalbank to

lower its contingency level. Furthermore, cer-

tain existing tasks will lapse as a consequence

of the planned introduction of new it systems

in the 1st quarter of 2015.

measures related to the staff reduction also

development in the accounts of domestic banks and mortgage banks table 4

balances according to the accounts

(kr. billion)average balances1

(kr. billion)net interest income

(kr. million)

2013 2012 2013 2012 change 2013 2012

current accounts and settlement accounts, net -59 -102 -73 -46 -27 - -17

Certificatesofdeposit -168 -184 -156 -162 6 168 -36

monetary-policy lending 23 66 31 24 7 78 75

domestic banks and mortgage banks, net (net position)

-204 -220 -198 -184 -14 246 22

source: danmarks nationalbank.1. average balances are calculated as simple averages of daily observations in 2013.


contributed to an increase of kr. 25 million in

staff expenses relative to 2012, as all wage-re-

lated expenses for the employees relieved

from duty in 2013 were included in the annual

accounts for 2013.

other expenses rose by kr. 14 million net. this

is attributable to a number of opposite fac-

tors, especially the increase in expenses for the

operation of it systems. the rise is offset by

reduced expenses for the property and the fact

that expenses for the physical relocation of coin

production to havnegade was included in 2012.

danmarks nationalbank completed a num-

ber of large improvement and development

projects in 2013, and major investments in e.g.

it development projects and production facili-

ties will also be made in the coming years. on

this basis, depreciation is expected to increase

considerably in the coming years, despite a fall

of kr. 2 million relative to 2012.

Distribution of the result for the year

the distribution of danmarks nationalbank’s

profitorlossisdeterminedfromyeartoyear,

basedonaspecificassessment.Since1995,it

has been a fundamental principle that positive

value adjustments are allocated to the value

adjustment reserve and negative value adju-

stments are covered by the value adjustment

reserve, to the extent that this is possible. if

value adjustment losses are not coverable by

the value adjustment reserve, they are covered

bytheoperatingprofit.Anyadditionalvalue

adjustment losses are covered by the General

Reserves.Thisprinciplehelpstosmoothfluc-

tuations in the amount payable to the central

government.

Since2002,distributionoftheprofitorloss

for the year after value adjustments has been

based on the principle that a reasonable guide-

line for the level of consolidation of danmarks

nationalbank would be that the General reser-

ves are maintained at a constant real level. in

other words, the increase in the General reser-

ves should generally match the development in

prices.

on this basis it has been decided, cf. section 19

of the danmarks nationalbank act, to cover the

loss for 2013, kr. 6,319 million, as follows:

• an amount corresponding to the value ad-

justments during the year, kr. 9,166 million,

is covered by the value adjustment reserve,

which subsequently amounts to kr. 5,672

million.

• 50 per cent of the result excluding value

adjustments, equivalent to kr. 1,423 million,

is allocated to the General reserves, which

subsequently amount to kr. 56,988 million.

• the remaining amount, i.e. 50 per cent of

the result before value adjustments, equi-

valent to kr. 1,423 million, is payable to the

central government.

in view of the low seigniorage and the shift bet-

ween interest income and value adjustments,

the principles that have applied for a number

of years will be reassessed before the distribu-

tion of danmarks nationalbank’s result for the

year in connection with the presentation of the

annual accounts for 2014.

expectations for 2014

viewed in isolation, the sustained low level of

interest rates implies low earnings in future.

new portfolio management measures are

expected to improve the relationship between

danmarks nationalbank’s overall risk and

return. exposure will be distributed on more as-

set types, including equities, thereby increasing

thediversificationgain.DanmarksNationalbank

expects a greater contribution to earnings from

thenewmeasures,butalsolargerfluctuations

in the accounts from year to year.


the board of Governors have today considered and approved

the annual accounts of danmarks nationalbank for 2013.

the annual accounts have been prepared in accordance with

the danmarks nationalbank act.

in our opinion, the accounts give a true and fair view of dan-

marksNationalbank’sassets,liabilitiesandfinancialposition

at 31 december 2013, and of the result of danmarks national-

bank’sactivitiesforthefinancialyear1January-31December

2013.

Copenhagen, 26 February 2014

Board of Governors

lars rohde, Chairman per callesen hugo Frey Jensen

statement by the board oF Governors


to the BoaRd of diRectoRs

Report on the annual accountsinternal audit have audited the accounts of danmarks na-

tionalbankforthefinancialyear1January-31December2013,

comprisingkeyfiguresandfinancialratios2009-13,Accounting

Policies,ProfitandLossAccount,BalanceSheetandNotes.The

annual accounts have been prepared in accordance with the

danmarks nationalbank act.

danmarks nationalbank’s committee of directors and Board of directors’ responsibility for the accountsthe committee of directors and board of directors are respon-

sible for the preparation and fair presentation of accounts in

accordance with the danmarks nationalbank act. the commit-

tee of directors and board of directors are also responsible for

internal controls considered necessary by the committee of di-

rectors and board of directors for preparing accounts that are

free of material misstatement, whether due to fraud or error.

internal audit’s responsibilityinternal audit’s responsibility is to express an opinion on the

accounts based on our audit.

Basis of opinionwe have conducted the audit in accordance with international

standards on auditing. those standards require that we plan

and perform the audit to obtain reasonable assurance that the

accounts are free of material misstatement.

the audit included an assessment of the committee of di-

rectors’ and board of directors’ established procedures and

internal controls that are relevant to danmarks nationalbank’s

preparation and fair presentation of the accounts, including

an assessment of the risk of material misstatement. the audit

also included evaluating the appropriateness of the accounting

policies used and the reasonableness of accounting estimates

made by the committee of directors and board of directors, as

well as evaluating the overall presentation of the accounts.

Theauditcomprisedthemostsignificantareasandriskareas

and we believe that the audit evidence we have obtained is suf-

ficientandappropriatetoprovideabasisforourauditopinion.

Theaudithasnotresultedinanyqualification.

opinionin our opinion, the accounts give a true and fair view of dan-




2013, in accordance with the danmarks nationalbank act.

statement on the Board of Governors’ Report on danmarks nationalbank’s accountswe have read the board of Governors’ report on danmarks

nationalbank’s accounts. we have compared the information

in the report with the information provided in the accounts

and also with the knowledge we have obtained and conditions

we have become aware of in connection with our audit of the

accounts. in our opinion, the information provided in the board

of Governors’ report on danmarks nationalbank is consistent

with the accounts.


bethina hamann

chief audit executive

internal audit’s report


to the BoaRd of diRectoRs

report on the annual accounts

we have audited the accounts of danmarks nationalbank for

thefinancialyear1January-31December2013,comprising

AccountingPolicies,ProfitandLossAccount,BalanceSheetand

notes. the annual accounts have been prepared in accordance

with the danmarks nationalbank act.

danmarks nationalbank’s committee of directors and Board of directors’ responsibility for the accountsthe committee of directors and board of directors are respon-

sible for the preparation and fair presentation of accounts in

accordance with the danmarks nationalbank act. the commit-

tee of directors and board of directors are also responsible for

internal controls considered necessary by the committee of di-

rectors and board of directors for preparing accounts that are

free of material misstatement, whether due to fraud or error.

auditors’ responsibilityour responsibility is to express an opinion on the accounts

based on our audit. we have conducted the audit in accord-

ance with international standards on auditing and additional

requirements in accordance with danish auditor legislation.

that requires that we comply with ethical codes and that we

plan and perform the audit to obtain reasonable assurance that

the accounts are free of material misstatement.

an audit involves performing audit procedures to obtain audit

evidence about amounts and disclosures in the accounts. the

audit procedures selected depend on the auditor’s judgement,

including the assessment of the risks of material misstatement

in the accounts, whether due to fraud or error. in making those

risk assessments, the auditor considers internal controls rele-

vant to danmarks nationalbank’s preparation and fair presenta-

tion of the accounts in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose

of expressing an opinion on the effectiveness of danmarks na-

tionalbank’s internal controls. an audit also includes evaluating

the appropriateness of the accounting policies used and the

reasonableness of accounting estimates made by the commit-

tee of directors and board of directors, as well as evaluating

the overall presentation of the accounts.

Webelievethattheauditevidencewehaveobtainedissuffi-

cient and appropriate to provide a basis for our audit opinion.

Theaudithasnotresultedinanyqualification.

opinionin our opinion, the accounts give a true and fair view of dan-




2013, in accordance with the danmarks nationalbank act.

statement on the Board of Governors’ Report on danmarks nationalbank’s accountswe have read the board of Governors’ report on danmarks

nationalbank’s accounts. we have not performed any other

procedures in addition to the audit of the accounts. on this ba-

sis, it is our opinion that the information provided in the board

of Governors’ report on danmarks nationalbank is consistent

with the accounts.


mona blønd

state-authorised public accountant

kpMGstatsautoriseret revisionspartnerselskab

erik stener Jørgensen

state-authorised public accountant

pricewaterhousecoopersstatsautoriseret revisionspartnerselskab

independent auditors’ report


these accounts, audited in the manner prescribed by the by-

laws of danmarks nationalbank, are hereby adopted by the

board of directors at the meeting on 17 march 2014.

as at 1 march 2014 the board of directors comprises

søren bjerre-nielsen, chairman helle bechgaard, deputy chairman

anne kristine axelsson niels boserup kristian thulesen dahl

michael dithmer benny engelbrecht lars asger enggaard

niels Fog peter Gæmelke bent Jensen

hans Jensen kjeld Johannesen mike legarth

MichaelMøller SofieCarstenNielsen KirstenNissen

ellen trane nørby John dyrby paulsen anja philip

lisbeth bech poulsen lars løkke rasmussen bente sorgenfrey

anne hedensted steffensen lars rebien sørensen

siGnatures


accountinG policies

GeneRal

danmarks nationalbank’s accounts for the year

2013 are presented in accordance with the

DanmarksNationalbankAct.Inallsignificant

respects these accounting policies are in ac-

cordance with the sound policies for european

central banks in the euro area. the main dif-

ferences relate to unrealised gains on foreign

exchange and securities, which are recognised

intheprofitandlossaccountinDanmarksNa-

tionalbank’s accounts.

the basic accounting assumptions are eco-

nomic reality. the effects of transactions and

events are recognised when they occur and

stated and presented in the accounts for the

year which they concern. the accounts include

all material and relevant circumstances, revalu-

ations are shown irrespective of their impact on

profitsandnetcapital,andcalculationandval-

uation methods are applied consistently within

each category of conditions. when initially

recognised, assets and liabilities are stated at

cost price. subsequently, assets and liabilities

are valued as described under each accounting

item.

the accounting policies applied are un-

changed from the previous year.

Thereclassificationofinterestoncertificates

of deposit was changed in 2013, cf. below.

Otherwise,theclassificationoftheitemsinthe

accounts remains unchanged from the previous

year.

Reclassification and changed presentation

Interestoncertificatesofdepositwasprevi-

ously stated at net value under “interest on

domestic deposits”. with a view to specifying

danmarks nationalbank’s interest income and

interestexpenses,respectively,fromcertifi-

cates of deposit issued, it has been decided to

showthisatgrossvalueintheprofitandloss

account.Thecomparativefigureshavebeen

adjustedinconnectionwiththereclassification.

Theorderoftheitemsontheprofitandloss

account and related notes has been changed

as a consequence of the above.

conversion of transactions in foreign currency

transactions in foreign currency are converted

to danish kroner at the exchange rate applying

on the transaction date. on the balance-sheet

date,allfinancialassetsandliabilitiesinforeign

currency are converted at the exchange rate

applying on that date. both realised and unre-

alised gains and losses are recognised in the

profitandlossaccount.

pRofit and loss account

interest

besides income on interest-bearing assets and

liabilities, interest income and expenses com-

prises premia and discounts on t-bills and certif-

icates of deposit, as well as premia on forward

securities and forward exchange contracts.


value adjustments, etc.

value adjustments comprise market-value

adjustments and exchange-rate adjustments

onfinancialassetsandliabilities,shares,other

equity investments and gold. both realised and

unrealised gains and losses are recognised in

theprofitandlossaccount.

income from shares, etc.

income from shares, etc. comprises income

from equity investments in listed and unlisted

companies, including associated companies.

income from shares is recognised in the year

when the dividend is announced.

other income

other income comprises income from dan-

marks nationalbank’s sale of coin sets and

medals, as well as other income that is not

related to danmarks nationalbank’s primary

activities or that is not annually recurring.

expenses

staff expenses comprise salaries and remu-

neration, including pension contributions and

support, etc., training costs and other staff

expenses. other expenses comprise materials

for production of banknotes and coins, etc.,

current expenses for danmarks nationalbank’s

properties, it expenses and other expenses.

other expenses

other expenses comprise expenses that are not

related to danmarks nationalbank’s primary

activities or that are not annually recurring.

Balance sheet

Gold

Gold is stated at the market value on the bal-

ance-sheet date.

financial assets and liabilities

Financial assets and liabilities are stated at the

market value on the balance-sheet date.

Repurchase agreements

and securities lending, etc.

securities sold in connection with simultaneous

repurchase agreements and securities made

available for lending are included in danmarks

nationalbank’s respective holdings.

shares, etc.

capital investments and equivalent investments

and equity investments in associated companies

(in which the ownership interest or voting rights

are 20 per cent or more) are stated at an esti-

mated market value on the balance-sheet date,

not exceeding the acquisition value, however.

Tangible and intangible fixed assets

Tangibleandintangiblefixedassetscomprise

danmarks nationalbank’s properties, technical

building facilities (lifts, electrical installations,

etc.), technical production facilities (for bank-

noteandcoinproduction),officeequipment

andvehicles,hardwareandsoftwareandfixed

assets under construction.

Fixed assets are stated on the balance sheet

at acquisition prices less accumulated deprecia-

tion and write-down.

assets with an acquisition value of less than

kr. 100,000 per unit are recognised as expendi-

ture in the year of acquisition.

depreciation and amortisation on a linear

per-annum basis takes place over the expected

useful lives of the assets.

the useful lives are assessed as follows:

bank properties 100 years

other properties 25-50 years

building improvements 25 years

technical building facilities 10-25 years

technical production facilities 5-10 years

hardware and software 3-5 years

other machinery and equipment 3-5 years

Fixed assets under construction comprise

expenses incurred for intangible develop-

mentprojectsandtangiblefixedassetsunder

construction. expenses are transferred to the

relevantfixedassetgroupswhentheassetsare

ready for use.


Profit/lossonthesaleoffixedassetsisrecog-

nisedintheprofitandlossaccountunderde-

preciation, amortisation and write-down and is

stated as the difference between the sales price

and the book value at the time of sale.

other assets

other assets include, inter alia, interest receiv-

able, positive net market value of hedging

instruments in the form of unsettled foreign-ex-

changetransactionsandotherfinancialderiva-

tives by instrument type, and prepaid expenses.

Financial derivatives such as forward secu-

rities and forward exchange contracts, inter-

est-rate and currency swaps etc. are stated at


Banknotes and coins in circulation

banknotes and coins in circulation are stated at

their nominal value.

other liabilities

other liabilities comprise, inter alia, payables,

negative net market value of hedging instru-

ments in the form of unsettled foreign-ex-

changetransactionsandotherfinancialde-

rivatives by instrument type, and uncovered

pension commitments, commitments by way

of support and severance payments and other

provisions for guarantees provided.

Financial derivatives such as forward secu-

rities and forward exchange contracts, inter-

est-rate and currency swaps etc. are stated at


contingent liabilities

other liabilities concerning guarantees pro-

vided are stated at the estimated value of the

payment obligation.

pension commitments

Fordefinedcontributionpensionplans,the

current premium payments to the pension com-

paniesarecarriedasexpenditureintheprofit

and loss account, and the pension commitment

hereafter passes to the pension companies.

Fordefinedbenefitpensionplans,provisions

are made in the accounts of danmarks nation-

albank for uncovered pension undertakings

compiled according to actuarial principles.


(kr. 1,000) note 2013 2012

net income from interest: 1interest on foreign assets 2,271,645 3,204,157interest on domestic loans 2 78,423 75,099Interestoncertificatesofdeposit 168,286 163,206interest on domestic bonds 762,154 872,440commission and other income 1,282 1,384

interest income, etc. 3,281,790 4,316,286

interest on foreign liabilities 14,025 18,460Interestoncertificatesofdeposit - 198,764interest on other domestic deposits 3 46,992 264,802

expenditure on interest, etc. 61,017 482,026

net income from interest, total 3,220,773 3,834,260

value adjustments, etc.: 4value adjustment of gold -6,233,544 792,292value adjustment of foreign assets 5 -2,438,489 -27,182value adjustment of domestic securities 6 -493,676 -127,880

value adjustments, etc., total -9,165,709 637,230

Profit/loss from financial items -5,944,936 4,471,490

income from shares, etc. 7 132,045 122,006

other income 8 122,784 60,368

expenses:

staff expenses 9 392,990 367,512other expenses 10 206,402 192,835

total expenses 599,392 560,347

depreciation, amortisation and write-down of tangible and intangible assets

11 29,942 32,195

other expenses - 19,000

Profit/loss for the year -6,319,441 4,042,322

Distribution of the profit/loss for the year:Profit/lossfortheyear -6,319,441 4,042,322Allocationfrom/toValueAdjustmentReserve 9,165,709 -637,230

2,846,268 3,405,092

allocated as follows: AllocationtoGeneralReserves,50percent/50percent 1,423,134 1,702,546Payabletothecentralgovernment,50percent/50percent 1,423,134 1,702,546

2,846,268 3,405,092

proFit and loss account


(kr. 1,000) note 2013 2012

assetsGold 12 13,914,740 20,148,284Foreign assets 13 443,188,140 462,815,855claims on the imF, etc. 14 20,016,793 21,364,422claims re banks' and mortgage banks' tarGet accounts at the ecb 3,904,588 13,040,423monetary-policy lending 15 23,145,472 66,400,954other lending 16 2,474,671 3,346,959domestic bonds 17 33,960,441 34,093,159shares, etc. 18 1,064,350 1,120,634Tangibleandintangiblefixedassets 19 734,757 673,905other assets 20 4,792,268 5,518,610accruals 28,535 25,688

total assets 547,224,755 628,548,893

liabilitiesbanknotes 21 60,681,434 60,045,497coins 21 5,809,589 5,759,343monetary-policy deposits net current accounts and settlement accounts 22 59,325,723 102,570,334 Certificatesofdeposit 168,032,000 184,101,000other deposits 23 10,900,008 25,352,655central government 24 163,375,742 163,693,580Foreign liabilities 25 3,125,153 2,685,203counterpart of special drawing rights allocated by the imF 26 12,773,407 13,323,359other liabilities 27 241,810 315,458

total creditors 484,264,866 557,846,429

General capital Fund 50,000 50,000statutory reserves 250,000 250,000value adjustment reserve 5,671,902 14,837,611General reserves 56,987,987 55,564,853

total net capital 28 62,959,889 70,702,464

total liabilities 547,224,755 628,548,893

apportionment of foreign-exchange-reserve assets 29

financial derivatives for conversion of foreign-exchange exposure 30

Other financial derivatives 31

contingent liabilities 32

loan and purchase commitments to the iMf 33

pension commitments 34

balance sheet


note 1 - net income from interest

note 2 – interest on domestic loans

(kr. 1,000) 2013 2012

interest on monetary-policy lending 77,981 74,598interest on lending to others 442 501

78,423 75,099

note 3 – interest on other domestic deposits

(kr. 1,000) 2013 2012

interest on current accounts - 16,552interest on the central government's deposits - 220,147interest to other depositors, etc. 46,992 28,103

46,992 264,802

as in the previous year, the development in net income frominterestwasinfluencedbymajorchangesinandshiftsbetween the various types of interest-bearing deposits and lending, and by changes in the level of interest rates for the individual types.

net income from interest fell from kr. 3,834 million to kr. 3,221 million.

net income from interest on foreign assets decreased by kr. 928 million to kr. 2,258 million. average net foreign as-sets decreased by kr. 12 billion to kr. 471 billion.

monetary-policy interest rates were historically low at the beginning of 2013, and the lending rate and the rate of interestoncertificatesofdepositchangedfurtherinthe 1st half of 2013. since mid-2013, the lending rate has been 0.2 per cent, the current-account rate 0.0 per cent and the rateofinterestoncertificatesofdeposit-0.1percent.Anegativerateofinterestoncertificatesofdepositthrough-out 2013 meant that banks and mortgage banks paid interest to place money at danmarks nationalbank.

average net deposits from these institutions amounted to kr. 198 billion in 2013, but due to the combination of net deposits and interest-rate developments, danmarks nation-albank posted a net interest income of kr. 246 million from these accounts. in 2012, average net deposits from banks and mortgage banks were kr. 184 billion, and danmarks nationalbank had net interest income of kr. 22 million on these deposits.

in 2013, danmarks nationalbank had no interest expend-iture to the central government. interest expenditure amounted to kr. 220 million in 2012. the average deposit was kr. 174 billion compared with kr. 204 billion in 2012.

interest on domestic bonds fell by kr. 110 million to kr. 762 million due to lower interest levels on reinvestment.

notes


total value adjustments for the year show a loss of kr. 9.2 billion compared with a gain of kr. 637 million in 2012, equivalent to a decline of kr. 9,803 million.

value adjustment of the gold stock entailed a loss of kr.6,234million,reflectingadropof30.9percentintheprice of gold calculated in danish kroner.

value adjustments of foreign assets resulted in a loss of kr. 2,439 million, comprising a market-value loss of kr. 2,460 million and an exchange-rate gain of kr. 21 million.

value adjustment of domestic securities resulted in a loss of kr. 494 million.

note 5 – value adjustment of foreign assets

(kr. 1,000) 2013 2012

market-value adjustment -2,459,858 -1,738,313exchange-rate adjustment 21,369 1,711,131

-2,438,489 -27,182

note 6 – value adjustment of domestic securities

(kr. 1,000) 2013 2012

value adjustment of domestic bonds -513,560 -105,367value adjustment of shares 19,884 -22,513

-493,676 -127,880

note 7 – income from shares, etc.

(kr. 1,000) 2013 2012

NetsHoldingA/S 48,098 48,097DanishShipFinanceA/S 46,160 35,822bank for international settlements (bis) 23,255 23,555VPSecuritiesA/S 14,532 14,532

132,045 122,006

note 8 – other income

(kr. 1,000) 2013 2012

income from the imF 116,879 48,962sale of coins and medals 5,724 7,835other income 181 153resolution of vb Finans subject to winding-up - 3,418

122,784 60,368

notes

note 4 – value adjustments, etc.


note 9 – staff expenses

(kr. 1,000) 2013 2012

salaries and remuneration 320,172 302,613pension contributions and support 58,381 48,455training 7,156 8,710other staff expenses 15,590 14,110

401,299 373,888

of which used for intangible development projectscapitalisedunderfixedassets -8,309 -6,376

392,990 367,512

of which remuneration of the management:Governors, salaries 9,228 8,997

Governors, pension contributions and actuarial adjustment ofdefinedbenefitpensioncommitments 1,649 1,196committee of directors and board of directors 863 859

11,740 11,052

salaries to the Governors are as follows:lars rohde, chairman (Governor from 1 February 2013) 2,918 - per callesen 2,991 2,951hugo Frey Jensen 2,991 2,949nils bernstein (resigned on 31 January 2013) 328 3,097

9,228 8,997

remuneration of the committee of directors and board of directors is as follows:chairman of the committee of directors and board of directors 111 110deputy chairman of the committee of directors 83 83deputy chairman of the board of directors 33 33OthermembersoftheCommitteeofDirectors,total(kr.56,000/member/year) 278 268OthermembersoftheBoardofDirectors,total(kr.22,000/member/year) 358 365

863 859

no bonus schemes exist at danmarks nationalbank.in 2013, the average number of employees was 528 on a full-time basis (2012: 518).

note 10 – other expenses

(kr. 1,000) 2013 2012

materials for banknote production 36,992 32,419materials for coin production 7,849 7,683real property, current expenses 56,343 61,675it expenses 60,930 41,843other expenses 44,288 49,215

206,402 192,835

notes


Note 11 – Depreciation, amortisation and write-down of tangible and intangible fixed assets

(kr. 1,000) 2013 2012

properties 16,614 16,156machinery and other operating equipment 7,175 8,696hardware and software 5,657 7,303Profit/lossonsaleoffixedassets 496 40

29,942 32,195

note 13 – foreign assets

(kr. 1,000) 2013 2012

Foreign bonds 216,534,514 191,244,906claims on central banks and supranational institutions 34,896,426 165,174,108claims on foreign commercial banks 12,376,800 3,715,977repo transactions against collateral in foreign bonds 179,379,065 102,679,600other foreign assets 1,335 1,264

443,188,140 462,815,855

note 12 – Gold

the value of the gold stock was kr. 13.9 billion at year-end compared with kr. 20.1 billion at the end of 2012. the reason for the drop is that the price of gold, calculated in kroner, fell by 30.9 per cent in 2013. the gold stock was unchanged at 66,550 kg.

investments have primarily been made in government and government-guaranteed bonds, deposits with central banks, supranational institutions and commercial banks or lending against government and government-guaranteed bonds as collateral.

deposits as collateral for stock futures contracts entered is included under claims on foreign commercial banks. the market value of the principals appears from note 31.

notes


danmarks nationalbank's claims on the imF result from denmark's membership of the imF. the claims, totalling kr. 20,017 million, are comprised of denmark's reserve position with the imF, danmarks nationalbank's holdings of special drawing rights (sdrs), loans to the prG trust, bilat-eral loans and loans under the nab agreement. claims on the imF were reduced by a total of kr. 1,348 million in 2013.

accounts with the imF are stated in sdrs. at 31 december 2013, the exchange rate for sdr was 834.06 (end-2012: 869.97). the sdr exchange rate is calculated on the basis of a basket of currencies, the value of which is determined as a weighted sum of the exchange rates of four currencies: 0.66 us dollar, 0.423 euro, 12.1 Japanese yen and 0.111 pound sterling.

The reserve position with the IMF, kr. 4,244 million, is the dif-ference between the membership contribution paid to the imF by denmark, i.e. denmark's quota, kr. 15,775 million, and the imF's holding of danish kroner deposited in an account at danmarks nationalbank, i.e. the imF's drawing right, kr. 11,551 million.

EachIMFmembercountryisassignedaquotareflectingitsrelative position in the world economy. the member coun-tries' quota shares determine their voting power, access to loans from the imF and contribution to the funding of the imF. the quotas were most recently realigned in 2011 as a result of the imF's 2008 quota reform. danmarks nation-albank has paid up 25 per cent of the danish imF quota in foreign exchange, while the remaining 75 per cent has been paid into the imF's account at danmarks nationalbank in danish kroner. the account is used for the imF's transac-tions in danish kroner, and the balance of the account con-stitutes the imF's drawing right at danmarks nationalbank.

The holdings of Special Drawing Rights allocated by the IMF amount to kr. 12,238 million. an amount corresponding to the imF's accumulated allocations to denmark can be found in note 26 "counterpart of special drawing rights allocated by the imF". as part of the sdr cooperation, danmarks nationalbank may be asked to purchase sdrs to increase its holdings to up to three times the accumulated allocation of sdr 1,531 million, corresponding to sdr 4,594 million. the current holdings are sdr 1,467 million, so that the maximum further purchase is sdr 3,127 million, equiva-lent to kr. 26,082 million.

Loans to the PRG Trust amount to kr. 74 million, equivalent to sdr 9 million. these loans are guaranteed by the danish government. the imF may exercise drawing rights of up to sdr 200 million, equivalent to kr. 1,668 million, under the prG trust loan agreement. the maximum maturity for drawings under this agreement is 10 years.

Bilateral loans under the 2009 loan agreement amount to kr. 2,962 million. in 2013, the imF increased its borrowing under this agreement by sdr 7 million, while redemptions amounting to sdr 34 million were made. bilateral loans under the 2009 loan agreement thus amount to sdr 355 million in total. under the 2009 agreement, the imF may borrow sdrs up to the equivalent of 1,950 million euro (kr. 14,548 million). the maximum maturity for drawings under this agreement is 5 years.

Loans under the NAB agreement amount to kr. 518 million, equivalent to sdr 62 million. the maximum maturity for drawings under this agreement is 10 years.

the total amounts drawn under the nab agreement and the 2009 bilateral loan agreement cannot exceed the credit commitment of sdr 3,208 million, equivalent to kr. 26,755 million, under the nab agreement. since sdr 355 million have been drawn on the 2009 bilateral loan agreement and sdr 62 million on the nab agreement, further drawings cannot exceed sdr 2,791 million, equivalent to kr. 23,275 million.

Bilateral loans under the 2012 loan agreement: in 2012, the imF concluded a bilateral loan agreement with danmarks nationalbank. the imF may borrow up to the equivalent of 5,300 million euro (kr. 39,540 million) under this agreement. the maximum maturity for drawings under this agreement is 10 years. no drawing rights have been exercised under the agreement, and this will not be relevant until the imF's lending capacity falls below a level determined by the imF's executive board.

reference is made to note 33 for an overview of loan and purchase commitments to the imF.

note 14 – claims on the iMf, etc.

(kr. 1,000) 2013 2012

denmark's imF quota 15,775,411 16,454,613the imF's drawing right 11,551,442 11,228,236

reserve position with the imF 4,223,969 5,226,377holdings of special drawing rights (sdrs) 12,238,190 12,770,353

16,462,159 17,996,730

loans to the prG trust 74,398 27,143bilateral loans under the 2009 loan agreement 2,962,284 3,326,629loans under new arrangements to borrow (nab) 517,952 13,920

20,016,793 21,364,422

notes


note 15 – Monetary-policy lending

(kr. 1,000) 2013 2012

weekly lending 13,500,000 13,290,0003-year lending 9,645,472 53,110,954

23,145,472 66,400,954

note 16 – other lending

(kr. 1,000) 2013 2012

banks and mortgage banks, lending to collateralised banknote holdings 2,428,940 3,307,748other loans 45,731 39,211

2,474,671 3,346,959

note 17 – domestic bonds

(kr. 1,000) 2013 2012

danish government bonds - 617,554mortgage bonds, etc. 32,555,102 32,028,997ship Finance bonds 1,405,339 1,446,608

33,960,441 34,093,159

notes


Note 19 – Tangible and intangible fixed assets

(kr. 1,000) 2013 2012

properties 607,168 580,597machinery and other operating equipment 20,794 26,717hardware and software 9,048 12,236Fixed assets under construction 97,747 54,355

734,757 673,905

Atthemostrecentofficialassessment,DanmarksNationalbank's properties were valued at kr. 1,556 million

note 20 – other assets

(kr. 1,000) 2013 2012

market value of unsettled foreign-exchange transactions 2,050,767 3,364,441Marketvalueofotherfinancialderivativesdenominatedinforeigncurrency 764,552 218,114market value of unsettled domestic securities transactions - 1,346accrual of interest 1,886,709 1,823,443other 90,240 111,266

4,792,268 5,518,610

note 18 – shares, etc.

(kr. 1,000) 2013 2012

capital investments and equivalent investments 771,788 803,072equity investments in associated companies 292,562 317,562

1,064,350 1,120,634

at 31 december 2013, danmarks nationalbank's portfolio of shares, etc. has an estimated market value of no less than kr. 3.5 billion. capital investments and equivalent investments comprise capital subscription to the ecb and shares in the bank for international settlements (bis), swiFt, nets hold-ing, dlr kredit and mch messecenter herning.

the following special conditions apply to capital investments and equivalent investments: the capital subscription to the ecb amounts to 6 million euro, equivalent to kr. 45 million. as a non-euro area member of the european system of cen-tral banks (escb), danmarks nationalbank has paid up 3.75 per cent of its share of 160 million euro (1.4754 per cent) of the ecb's total capital of 10,825 million euro.

the purpose of the capital subscription is to contribute to the operation of the ecb. as a non-euro area member of the escb, danmarks nationalbank neither participates in thedistributionofprofitsnortheallocationoflossesintheecb.

the bis shares have been paid up at 25 per cent of their nominal value. danmarks nationalbank has an obligation to pay up the remaining 75 per cent of the nominal value of its bis shareholding if asked to do so by the bis. this payment obligation amounts to sdr 32 million, equivalent to kr. 268 million.

equity investments in associated companies comprise:

Equityinvestment/votingrights share of equity share of result

VPSecuritiesA/S 24.2/24.2percent kr. 36.1 million kr. 16.6 millionDanishShipFinanceA/S 18.9/20.8percent kr. 319.4 million kr. 84.0 millionBankernesKontantserviceA/S 25.0/25.0percent kr. 28.0 million1 kr. -16.2 million1

1Accordingtothelatestfinancialstatements,whicharefrom2012

notes


note 21 – Banknotes and coins

note 22 – net current accounts and settlement accounts

(kr. 1,000) 2013 2012

deposits in current accounts and settlement accounts 344,307,506 188,028,702drawing on current accounts 284,981,783 85,458,368

59,325,723 102,570,334

at 31 december 2013, danmarks nationalbank acts on a fullysecuredbasisasguarantortoVPSecuritiesA/Sforkr. 129.2 billion (2012: kr. 111.9 billion) and to the danish bankers association (sumclearing) for kr. 211.2 billion (2012: kr. 55.6 billion) in connection with the banks' and mortgage banks' payment settlements with 2 January 2014 as the value date.

banknotes increased by kr. 0.6 billion to kr. 60.7 billion, while coins increased by kr. 50 million to kr. 5.8 billion. banknotes include kr. 363 million in Faroese banknotes.

note 23 – other deposits

(kr. 1,000) 2013 2012

banks and mortgage banks 3,910,903 13,048,462other deposits 6,989,105 12,304,193

10,900,008 25,352,655

this item includes the banks' and mortgage banks' depos-its in current accounts in euro totalling kr. 3.9 billion.

note 24 – central government

Thecentralgovernment'sshareoftheprofit/lossfortheyear of kr. 1,423.1 million is included in this amount.

note 25 – foreign liabilities

these liabilities comprise deposits in kroner at danmarks nationalbank by supranational institutions and other cen-tral banks. the european commission's deposit amounts to kr. 3,078 million.

notes


note 28 – net capital

(kr. 1,000)General

capital Fund and statutory reserves

valueadjustment

reserveGeneral

reserves total

net capital at 1 January 2013 300,000 14,837,611 55,564,853 70,702,464Carriedforwardfromtheprofit/lossfortheyear - -9,165,709 1,423,134 -7,742,575

net capital at 31 december 2013 300,000 5,671,902 56,987,987 62,959,889

note 27 – other liabilities

(kr. 1,000) 2013 2012

market value of unsettled domestic securities transactions 32 - other debt 104,001 194,194other 137,777 121,264

241,810 315,458

note 26 – counterpart of special drawing Rights allocated by the iMf

this liability comprises the imF's original allocation of spe-cial drawing rights to denmark. total allocations were sdr 1,531 million at 31 december 2013. there were no changes in the allocation of sdrs in 2013. the current holdings of SDRsarespecifiedinNote14"ClaimsontheIMF,etc."

notes


note 29 – apportionment of foreign-exchange-reserve assets

(kr. million) 2013 total eur usd Gbp other

foreign-exchange-reserve assetsGold 13,915 - - - 13,915Foreign bonds 216,535 152,586 54,167 3,135 6,647

claims on central banks and supranational institutions 34,896 31,811 2,942 56 87claims on foreign commercial banks 12,378 151 12,222 1 4repo transactions 179,379 133,912 45,467 - - claims on the imF 20,017 - - - 20,017

477,120 318,460 114,798 3,192 40,670


foreign-exchange-reserve assetsGold 20,148 - - - 20,148Foreign bonds 191,245 102,194 73,574 5,776 9,701

claims on central banks and supranational institutions 165,174 162,023 2,974 83 94claims on foreign commercial banks 3,717 48 3,657 5 7repo transactions 102,680 60,802 41,878 - - claims on the imF 21,365 - - - 21,365

504,329 325,067 122,083 5,864 51,315

note 30 – financial derivatives for conversion of foreign-exchange exposure


net positions at market valueForward exchange contracts:purchase 123,211 117,671 473 - 5,067sale -121,160 -1,843 -106,558 -4,088 -8,671

unsettled spot currency trades: purchase - - - - - sale - - - - -

2,051 115,828 -106,085 -4,088 -3,604


net positions at market valueForward exchange contracts:purchase 139,416 139,416 - - - sale -136,056 - -118,600 -6,873 -10,583

unsettled spot currency trades: purchase 2,223 675 1,120 - 428sale -2,219 -1,122 -672 - -425

3,364 138,969 -118,152 -6,873 -10,580

notes


Note 31 – Other financial derivatives

(kr. million) 2013 total dkk eur usd

principals at market valuecurrency and interest-rate swaps: purchase 12,952 - 12,952 - sale -12,187 - - -12,187

Forward contracts, securities: purchase 4,917 4,917 - - sale - - - -

unsettled spot trades, securities: purchase - - - - sale -3,201 -3,201 - -

Futures, bonds: purchase - - - - sale - - - -

Futures, shares: purchase 2,617 - 1,322 1,295sale - - - -

(kr. million) 2012 total dkk eur usd

principals at market valuecurrency and interest-rate swaps: purchase 7,333 - 7,333 - sale -7,115 - - -7,115

Forward contracts, securities: purchase 9,776 9,776 - - sale - - - -

unsettled spot trades, securities: purchase 103 103 - - sale -4,703 -4,703 - -

Futures, bonds: purchase 111 - 41 70sale -68 - -48 -20

Futures, shares: purchase - - - - sale - - - -

notes


note 32 – contingent liabilities

(kr. 1,000) 2013 2012

VPSecuritiesA/S,shareofGuaranteeCapital 53,405 51,077VPSecuritiesA/S,guaranteeforerrorsbyotheraccount-holdinginstitutions 24,268 23,214other guarantees 1,100 1,100

78,773 75,391

in addition, danmarks nationalbank has established an intervention agreement with the ecb.

note 33 – loan and purchase commitments to the iMf

(kr. million) 2013 2012

the imF's drawing right 11,551 11,228danmarks nationalbank's obligation to purchase sdrs 26,082 27,200undrawn amount of loan facility for the prG trust 1,593 1,713

undrawn amount of loan facilities for the imF in connection with bilateral loans (2009 agreement) and nab agreement 23,275 24,566

undrawn amount of loan facilities for the imF in connection with bilateral loans (2012 agreement) 39,540 39,540

102,041 104,247

these commitments constitute danmarks nationalbank's maximum further loan and purchase commitments to the imF. the current credit exposure is stated in note 14, which also provides details on the loan and purchase commit-ments.

notes


note 34 – pension commitments

present and former employees of danmarks nationalbank haveeitheradefinedcontributionoradefinedbenefitpension plan.

Fordefinedcontributionpensionplans,DanmarksNa-tionalbank carries the ongoing premium payments to the pension companies as expenditure. once the pension con-tributions for these plans have been paid to the pension companies, danmarks nationalbank has no further pension commitments to these employees.

Withregardtodefinedbenefitpensionplans,Danmarksnationalbank is obliged to ensure the policyholder a de-finedpensionbenefit.Fortheseplans,DanmarksNational-bank bears the risk concerning the future development in interestrates,wages,inflation,mortality,etc.

danmarks nationalbank is thus obliged to make the con-tributionsnecessarytoensurethefulfilmentofthepensionundertakings.

Pensioncommitmentsforthedefinedbenefitpensionplansarecalculatedasthecapitalvalueofthefuturebenefitspayable under the plan. the pension undertakings are based primarily on the salary on retirement. the capital value is calculated on the basis of assumptions concerning the future development in e.g. wage levels, interest rates, inflationandmortality.

Inprinciple,thedefinedbenefitpensionplansarecoveredin danmarks nationalbank's pension Fund subject to wind-ing-up.

Otherdefinedbenefitpensionplansarecoveredinapen-sion company.

provision is made in the accounts for a plan concerning a former governor.

Pensioncommitmentsfordefinedbenefitpensionplansand declarations of support covered in a pension compa-ny amount to kr. 40.6 million at 31 december 2013, while the provision on danmarks nationalbank's balance sheet amounts to kr. 26.5 million.

KeyfiguresfortheaccountsofthePensionFund:

(kr. million) 2013 2012

pension commitments and other liabilities 3,236 3,591Fair market value of the assets of the pension Fund 4,316 4,554net capital of the pension Fund 1,081 964solvency requirement of the pension Fund 130 142

notes

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