COPENHAGEN (Reuters) - Danish Prime Minister Helle Thorning-Schmidt reshuffled her cabinet on Tuesday, appointing the junior coalition partner's new leader as growth and business minister to revive a struggling banking sector and oversee economic recovery.
In her new role, Annette Vilhelmsen, who was elected leader of the Socialist People's Party on Saturday, is likely to preside over a new wave of consolidation in the country's highly fragmented banking industry.
Denmark has already introduced four packages to support a sector that has been hit by bad debts from a burst property bubble and rising writedowns on loans to struggling farmers.
Some 11 banks have been taken into state hands since the start of the financial crisis and tougher writedown rules rolled out in April are seen squeezing smaller lenders even further, forcing mergers and acquisitions.
Holger Nielsen, also a member of the Socialist People's Party, will take over as tax minister, the prime minister said.
The Socialist People's Party retains six ministers out of 22 in the government.
The "Red bloc" alliance of the Social Democrats, the Socialist People's Party and the more centrist Social Liberals, swept to power last year, ending a decade of center-right rule and giving Demark its first woman prime minister in Thorning-Schmidt.
But the economy has continued to struggle and support for the government has been falling in the face of criticism that it has failed to stick to election promises to boost growth, cut public transport prices, and protect unemployment benefits and access to early retirement.
Denmark is expected to post slim growth this year and remains the weakest-performing economy in the Nordic region, held back by sluggish private consumption. The government has forecast public sector deficits both this year and next.
Elections are not due until 2015.
(Reporting by Mia Shanley; Editing by Alison Williams)