Banks in Firing Line If Danish Opposition Wins: Handelsbanken

(Bloomberg) --

A Social Democratic government in Denmark would be bad for the country’s financial industry, according to Handelsbanken.

Most polls show that the center-right government of Prime Minister Lars Lokke Rasmussen will be ousted in national elections on June 5, with Mette Frederiksen, the leader of the opposition Social Democrats, set to replace him.

“The polls thus currently point toward the Danish parliamentary election having a negative outcome for the Danish banks,” Handelsbanken said in a note to clients, citing Voxmeter polling data.

The Social Democrats and the group of parties that have traditionally backed them are leaning toward imposing more taxes on the industry. The decision comes as politicians feel emboldened to target bankers after a $230 billion money laundering scandal engulfed Danske Bank A/S last year. A separate $2 billion tax-fraud saga left Denmark’s state coffers depleted.

The Social Democrats say they want to use higher bank taxes to pay for better health care and education. The party is proposing an additional 1.5 billion kroner ($225 million) in taxes on banks, which last year reported net profit of 31 billion kroner, according to Handelsbanken. The Social Democrats are also looking into higher taxes on income from dividends and interest payments.

“Overall, the suggested financing of the welfare promises is considered to be negative for the Danish banking sector,” according to Handelsbanken. The current government, meanwhile, plans to fund expansions using budget surpluses.

--With assistance from Jonas Cho Walsgard.

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

To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net

©2019 Bloomberg L.P.