Danske Bank plans £2.3bn rights offer

City A.M. Reporter
DANISH lender Danske Bank said it would raise 20bn crowns ($3.7 bn) in new capital as it posted fourth-quarter profits below market consensus, as loan impairments remained high.

The bank reported a 12 per cent rise in fourth-quarter pre-tax profits to 1.45bn crowns, aided by a 40 per cent drop in loan losses, but missing market consensus for 2.85bn.

Denmark’s biggest financial institution said it recommended no dividend be paid for 2010 and that it had requested permission from the government to repay early a hybrid loan it received from state coffers during the financial crisis.

These measures, combined with the capital increase, would strengthen group capital, Danske said in the statement.

It said fourth-quarter loan impairment charges fell 40 per cent to 2.98bn crowns, still above the 2.22bn expected by analysts.

As Nordic banks start to emerge from the worst of the financial crisis, supported by robust economies in the region, pressure is building to hand back capital to shareholders.

The expiry last year of a government aid package to banks, ending a restriction on dividends, has increased pressure on Danske Bank to resume payouts.

Meanwhile, DnB NOR, the biggest Norwegian bank, reported fourth-quarter profits surpassing all forecasts and said it saw low loan losses this year.

The contrasting results released yesterday, and earlier strong profits from major Swedish banks, reflect the different pace of economic recovery, with Denmark clearly lagging its Nordic neighbours. On Tuesday Swedish lender Swedbank reported it had swung back into the black.