(Bloomberg) — Jyske Bank A/S won a closely watched court battle over its use of negative interest rates for retail customers, a ruling that spares Denmark’s financial industry from the risk of massive compensation claims.

The Commercial and Maritime Court in Copenhagen on Monday sided with Jyske, finding that the bank’s general terms on variable rates provided sufficient contractual basis to impose sub-zero interest on certain deposit accounts. The Consumer Ombudsman had argued the terms were too vague and that fundamental changes required explicit customer consent, but the court rejected that view.

The decision is the first of its kind in Denmark and will be a relief for the wider industry. Jyske was the first lender to move deposit rates into minus in 2019 but almost all Danish banks followed and relied on broadly similar contractual terms to adjust deposit conditions. A defeat for Jyske could have set a precedent threatening the entire industry with retroactive liabilities running into billions of kroner.

“It’s a complicated and principled matter that could potentially have implications for the entire banking sector,” Jyske Bank’s Legal Director Martin Skovsted-Nielsen said by email. “We’re therefore very satisfied and relieved that we have been upheld in the essential aspects of the case today.” 

Jyske Bank shares rose as much as 1.8% in Copenhagen, out-pacing gains in the local benchmark index.

The Consumer Ombudsman said it’s now reviewing the verdict and that it’s too early to decide on a potential appeal. 

Denmark’s central bank had sub-zero monetary policy rates for a decade spanning 2012-2022, a world record.

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