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Danish Bankers Seek Interest-Rate Cap After Loan Made at 760% a Year

Danish Bankers Seek Interest-Rate Cap After Loan Made at 760% a Year

(Bloomberg) -- Denmark’s banks are calling on the government to impose a limit on what companies offering consumer loans can charge after a court ruled a 760 percent interest rate was legal.

Finans Danmark says that while competition generally should determine prices and loan costs ought to reflect credit risks, recent surges in interest rates to several hundred percent are dangerous. The Copenhagen-based industry organization said in a statement on Monday it’s seeking a cap of 50 percent.

“This is unsustainable,” Ulrik Nodgaard, Finans Danmark’s chief executive officer, said. “This doesn’t benefits consumers.”

Danish householders already have the highest level of debt in the European Union, according to the country’s central bank. Most of that is home mortgages.

Denmark’s Eastern High Court said in a ruling earlier this year that a loan given by the company TurboLaan in 2016 with an annual percentage rate of 759.79 percent didn’t violate consumer protection laws, because Denmark doesn’t cap rates. The ruling reversed a low court’s finding.

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Christian Wienberg

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