UPDATE 1-Denmark classes six of its banks as "too big to fail"
* Denmark says six financial institutions "too big to fail"
* Says total capital requirement would be 15.5 percent
* Proposes crisis management buffer, increased supervision (Adds details, comments, share prices)
COPENHAGEN, March 14 (Reuters) - Denmark plans to classify six of its banks as "too big to fail," meaning they could face tougher capital rules and increased supervision as the government seeks to reduce the risk of future financial crises.
A government committee charged with looking into the banking sector said on Thursday the country's so-called Systemically Important Financial Institutions (SIFIs) were Danske Bank , Jyske Bank, Nykredit, Nordea Bank Danmark , BRFkredit and Sydbank.
"These are institutions which are so large that they can impact the entire financial system and the economy, should they encounter problems," said Annette Vilhelmsen, minister for business and growth, whose department set up the committee.
According to the proposal, the total capital requirement for Danish SIFIs would be 15.5 percent of risk weighted assets, in line with requirements for SIFIs in neighbouring Sweden.
The SIFIs would also hold a crisis management buffer, amounting to 5 percent of risk-weighted assets and which would be established over a three-year period starting in 2020.
The proposals need to be approved by parliament to come into effect.
Shares in Danske Bank were up 0.5 percent at 0957 GMT, while Jyske Bank was up 0.8 percent and Sydbank up 0.3 percent, against a 0.4 percent rise in the Copenhagen stock exchange's benchmark index. (Reporting by Mette Fraende; Editing by Jon Boyle and Mark Potter)
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