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(Bloomberg) -- Denmark’s biggest bank is considering how it will need to adjust its retail deposits should negative interest rates persist.

Danske Bank A/S is “preparing for low rates, negative rates,” to continue for a while “and we have to take it from there,” Chief Executive Officer Thomas F. Borgen said in an interview in Copenhagen.

Borgen is trying to adjust his business to cope with the central bank’s efforts to defend Denmark’s euro peg. That’s driven its benchmark deposit rate to minus 0.5 percent and sent government yields below zero for maturities as long as five years. Danish mortgage rates are also negative for shorter maturities. Borgen says it’s possible rates will stay negative for as long as two years.

Whether Danske will charge retail customers “depends how long’’ rates stay negative,” Borgen said. “But in the time span I see -- and let’s say at least for the next year -- we will protect the current account holders from negative rates.”

Meanwhile, borrowers are benefiting from the development. Danske’s mortgage unit, Realkredit Danmark A/S, says it will continue to issue loans even at negative interest rates. Nykredit Realkredit A/S, Denmark’s biggest mortgage lender, says it won’t. Nordea Kredit, a unit of Nordea Bank AB, has stopped offering bond-backed loans with rates that adjust every year.

No Coordination

The lack of a coordinated response from the industry may confuse investors, according to Sune Worm Mortensen, a director at Nykredit.

“We will follow the situation and that might later lead to a change in opinion,” Carsten Noeddebo Rasmussen, CEO of Realkredit Danmark, said by phone. “It has been quite difficult to guess about the rates for the last couple of days.”

Since the Swiss National Bank abandoned its euro cap on Jan. 15, Denmark has fought back conjecture its currency peg to the euro would be next to break. Policy makers have argued comparisons between the two economies’ monetary regimes make little sense: Switzerland made clear in September 2011 its cap was temporary, while Denmark’s three-decades-old peg is backed by the European Central Bank.

Denmark yesterday revealed it sold a record 106.3 billion kroner ($16.4 billion) in January to weaken the currency. Its main deposit rate is minus 0.5 percent following three cuts last month.

Record-low rates are also fanning property prices in an economy that’s only just emerged from a burst housing bubble. Credit at cheaper rates than ever before also risks fueling borrowing for the world’s most indebted households.

The Financial Supervisory Authority in Copenhagen is keeping a close eye on property prices, and is ready to employ new rules on mortgage lending to ensure cheap money doesn’t create another real estate bubble.

The FSA “is following on a constant basis developments in housing prices,” Ulrik Noedgaard, director general of the Copenhagen agency, said in an e-mailed response to questions.

--With assistance from Peter Levring in Copenhagen.

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net To contact the editors responsible for this story: Tasneem Hanfi Brogger at tbrogger@bloomberg.net Christian Wienberg

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