COPENHAGEN, Jan 5 (Reuters) - Denmark's central bank governor on Monday called for a public loan facility, worth up to 70 billion crowns ($13 billion), to strengthen the capital of the country's banks.
The central bank said its stress tests showed many Danish banks would have problems if they were exposed to major economic shocks.
"A few Danish banks cannot withstand the expected economic development as it with great uncertainty looks today," Nationalbanken governor Nils Bernstein said in a statement.
Against that background, he said it was rational for the Nordic country to introduce a temporary borrowing facility to supplement the capital that can be raised in the private market.
The central bank said an injection of 70 billion crowns would ensure Danish banks could withstand significant economic shocks and gain access to financing on conditions similar to those in the market.
Denmark's centre-right government is negotiating with the opposition to introduce a second support package for the country's banks which would bolster lenders' capital reserves by around 100 billion crowns to allow more room for private and corporate loans.
The government plans to inject capital into its banks to jump-start lending, but is not considering nationalising financial institutions.
In an attempt to shore up confidence and unfreeze lending between banks, Denmark in October offered an unlimited government-backed guarantee on deposits and on banks' debt to creditors other than from covered bonds.
Although that package has worked as intended, banks have been forced to keep higher capital reserves and curtail their lending. The banking lobby has said a state injection of funds into banks would be in Denmark's interest. (Reporting by Kim McLaughlin, editing by Stephen Nisbet and Toby Chopra)