Denmark bails out Roskilde Bank

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Earlier this morning, I read about the bailout of Roskilde Bank in Denmark through the Sydney Morning Herald.

Roskilde Bank, whose shares performed the worst last year among the Nordic region’s 86 financial companies, became the first Danish lender to be bailed out by the central bank since the subprime crisis started.

The bank found that writedowns had to be made on a “significantly larger scale” than it had expected, Roskilde Bank, based in the Danish city of the same name, said.

It will receive “adequate” liquidity after the central bank discussed the matter with regulators and the Danish government, the central bank said.

Roskilde Bank is now mulling a sale of its assets and would be the second Danish lender to be acquired amid the turmoil on financial markets in the wake of the U.S. subprime crisis.

Sydbank, the third-largest Danish lender, this year acquired BankTrelleborg, which said it had “significant financial problems.”
-Sydney Morning Herald, 11 Jul 2008

Expect many more financial services bankruptcies or bailouts to come in this crisis.

(Update: 11 Jul 2008 11:55EDT)

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Apparently there was speculation as to whether Denmark’s largest and best-known bank, den Dansk Bank, would take over Roskilde as JP Morgan did Bear Stearns in the U.S. back in March. Danske Bank says no.

My translation:

Danske Bank not interested in Roskilde Bank

Roskilde Bank announced late Thursday that the bank has been promised liquidity from the National Bank, pending a permanent settlement of the bank’s situation through a complete or partial sale of the bank.

At Danske Bank, spokesperson Jonas Torp said the following in response to the question of whether Danske Bank could be interested in acquiring Roskilde Bank:

“Our expansion strategy is primarily abroad, and we feel that we are have a full product offering [in Denmark], from which to expand from. In Denmark, the focus is on organic growth and not on acquisitions,” Jonas Torp replied to the news agency Direkt.

Original story:

Danske Bank ikke interesseret i Roskilde Bank
Roskilde Bank meddelte sent torsdag, at banken har fået tilsagn om likviditet fra Nationalbanken, mens der arbejdes på en varig afklaring af bankens situation gennem et helt eller delvist salg af banken.

Hos Danske Bank svarer Jonas Torp, der er pressechef, følgende på spørgsmålet om, hvorvidt Danske Bank kunne være interesseret i at overtage Roskilde Bank:

“Vores ekspansionsstrategi er primært i udlandet, og der føler vi, at vi har en fuld palette, og det er den, vi skal ekspandere ud fra. I Danmark er fokus på organisk vækst og ikke på opkøb,” siger Jonas Torp til nyhedsbureauet Direkt.

Børsen.dk, 11 Jul 2008

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In addition, note that Roskilde went to the wall because of bad loans to home builders. This will be a common theme in the US, UK and Spain going forward. Here are some other sources.

Roskilde Bank A/S fell the most since its initial public offering in 1989 after it made bad loans to home builders and needed Denmark’s first central bank bailout in 15 years.The central bank will provide “unlimited liquidity,” and the Danish Bankers Association agreed to cover as much as 750 million kroner ($159 million) of losses, Roskilde Chief Executive Soeren Kaare-Andersen told reporters today. The bank, facing more writedowns than it expected on loans to property developers, dropped as much as 57 percent in Copenhagen trading.

Bloomberg News, 11 Jul 2008

So it looks like a takeover a-la Bear is out. I have added Roskilde to my list of Bankrupt global financial institutions. For a comprehensive American-only list, see bankimplode.com.

Sources
Danske Bank ikke interesseret i Roskilde Bank, Børsen.dk
Danish Central Bank Bails Out Roskilde Bank, Bloomberg
Roskilde Drops in Denmark After Central Bank Bailout, Bloomberg
Danish Central Bank Bails Out Roskilde Bank , immobilienblasen
Something Rotten in the State of Denmark?, Alpha Sources

For more posts on Denmark or Sweden, see the tags Denmark and Sweden.

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