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"We're not quite out of the crisis yet, but the market has come to a stabilised level," says one partner, giving a neat overview of how banking and finance stands in Denmark at the moment. There is a modicum of cautious optimism as a groggy economy tries to shake off the after-effects of a series of heavy bank collapses that occurred during the economic crisis, but there are still some lingering concerns....

"We're not quite out of the crisis yet, but the market has come to a stabilised level," says one partner, giving a neat overview of how banking and finance stands in Denmark at the moment. There is a modicum of cautious optimism as a groggy economy tries to shake off the after-effects of a series of heavy bank collapses that occurred during the economic crisis, but there are still some lingering concerns.

This is not helped by the banks, which are tightening the purse strings to a previously unseen level. "The banks have a huge funding issue, which is affecting everything else," says one partner; another agrees: "Lending has almost disappeared." This has also led to a slump in acquisition finance, an area which one lawyer describes as "dormant".

Other remnants of the global crisis also remain, as one partner says, "For almost three years we have been seeing a lot of distressed banking work and that is continuing." With the banks still troubled, the distressed work could stretch on into this year.

In capital markets things are slightly rosier, with the debt side in particular continuing to be extremely active as companies attempt to fill the funding gap left by the banks. The equity markets, perhaps surprisingly, have also been fairly busy, with IPOs and rights issues starting to return. However, market conditions have contributed to disruption here, and some have been called off: "IPOs have been postponed yes, and that is due to the market's volatility," says one lawyer.

This volatility is also effecting investment. The country, which historically was so attractive for its institutional robustness and ready market, is seeing a drop off of investment as sensitivity to risk becomes more acute. "There hasn't been a lot of financial stability so investment in Denmark has been very low," says one banking lawyer.

The government has also been heavily involved in the markets to save certain banks, so much so it had to draw up special rules to ensure it didn't wade out of its depth. "The kingdom had been given special dispensation to not have to compulsorily purchase the rest of the shares in the banks they now own. This has been renewed three times already," explains a partner.

The downturn in M&A deal flow from last year has finally levelled out it would seem, with some confidence returning to the market. However partners continue to qualify their optimism by saying the market still shows signs of volatility....

The downturn in M&A deal flow from last year has finally levelled out it would seem, with some confidence returning to the market. However partners continue to qualify their optimism by saying the market still shows signs of volatility.

"I think it's fair to say that deals have become even more difficult to execute. There has been a bigger gap between buyer and seller agreements than ever before," says one, while another adds, "Funding for deals is also hard to find. There is a whole different level of gearing and leverage now."

A major trend in this area is to do with private equity and divestment, and a number of deals this year have been of this type.

"There has been a pickup in private equity investors exiting their investments," says one partner. "In fact, there was one of these that happened that was the first for many years in Europe and marked an opening in the market if you ask me, as work then started picking up again." Another agrees: "There has been a number of private equity divestments, and some large distressed work. However, there have been no large distressed sales."

In a year marked by yet more volatility and uncertainty, R&I teams have found themselves still busy dealing with the winding-up of distressed companies and their assets."We at all times try to keep the debtors alive, try and reduce their balance sheet," says one partner, but acknowledges that, due to the economy, they are finding it harder to keep companies afloat....

In a year marked by yet more volatility and uncertainty, R&I teams have found themselves still busy dealing with the winding-up of distressed companies and their assets.

"We at all times try to keep the debtors alive, try and reduce their balance sheet," says one partner, but acknowledges that, due to the economy, they are finding it harder to keep companies afloat.

It is also the case that the law in Denmark creates problems with business rescue too. "We at the moment have no discharge system, like the one in the UK. This discharge system would be useful, as if the interest rates keep going I am worried about a mass default on mortgages," says a partner.

A discharge system grants an injunction that bars creditors from pursuing outstanding debts. The advantage being that it allows debtors to have 'a fresh start' and doesn't tie up time and resources something the Danish market could certainly benefit from.

Although there have been problems across almost all sectors in Denmark, the real estate market in particular has seen a spate of bankruptcies this year, creating a lot of work for firms operating in this sector.