COPENHAGEN, Dec 8 (Reuters) - Denmark is considering injecting capital into its banks to jump-start lending, Prime Minister Anders Fogh Rasmussen said in an interview with financial daily Borsen published on Monday.
"The government is considering ways of supplying capital to financial institutions in Denmark so that they can compete on equal footing with institutions in other countries and so that we can ensure they make adequate loans to healthy companies and profitable investments," Rasmussen was quoted as saying.
He said a decision will be taken within weeks.
"We are getting reports that even healthy and well-run businesses now are having difficulties getting capital," Rasmussen was quoted as saying. "We need to react to that. If loans to companies become constrained that could really take the economic conditions down really fast."
Deputy Prime Minister Lene Espersen, who is also Minister for Economic Affairs, confirmed that the government was putting together a new intervention package under which the state would inject capital into banks but would not take them over, Danish news agency Ritzau reported.
In an attempt to shore up confidence and unfreeze lending between banks, Denmark in October offered a government-backed unlimited guarantee on deposits and on banks' debt to creditors apart from covered bonds.
In the return, Danish banks agreed to pay up to 35 billion Danish crowns ($6.03 billion) over two years into a liquidation fund to take over distressed institutions.
"We clearly also have to react to the fact that countries around us have a taken a step further and made capital injections," Rasmussen said. "If we're the last ones out without it, our financial institutions would have a worse position than those in other countries."
He added that the government wanted a deal that would prove profitable for taxpayers when markets recovered.
He was also quoted as saying that the government was considering ways to cut taxes to boost the economy.
"We could have a tax cut that would pump money into the system now," Rasmussen said in the interview. "But it requires that it is paid for later so that we don't undermine (long term economic goals.)"
(Reporting by Gelu Sulugiuc; editing by David Stamp)