Denmark lender fails

City A.M. Reporter
Denmark has been left bearing a £1.72bn bill as Amagerbanken, the country’s eighth-biggest lender, became its tenth bank to be nationalised following the global financial crisis.

Amagerbanken said yesterday that it would transfer its assets to Finansiel Stabilitet A/S, the state company that administers failed banks, and administrators would close the bank.

Amagerbanken said fourth-quarter writedowns wiped out its equity, attributing a large part to failed property investors.

The failure of Amagerbanken was roughly the same size as the mid-2008 collapse of Roskilde Bank, previously the biggest Danish bank failure.

The bill to the government for taking over Amagerbanken is 15.2 billion Danish krone (£1.72bn), which is the price that the state administrating company Finansiel Stabilitet will pay for the remaining assets.

The Danish banking industry will cover 2.2 billion crowns of that cost through the country's depositary guarantee scheme, Amagerbanken Chairman Niels Heering told a news conference.

If total losses from Amagerbanken rise above 15.2 billion crowns, Danish financial institutions would have to bear a larger burden than 2.2 billion, Heering said.

Denmark's biggest bank Danske Bank, as well as the Nordic region's biggest bank Nordea and four competitors said they had little or no exposure to Amagerbanken.

Denmark has the most fragmented banking industry of any of the Nordic countries, with more than 100 financial institutions.

Danske Bank said its total exposure to Amagerbanken was 10 million crowns, and other small Danish banks said they did not have significant exposure to the failed bank.

Sweden's Handelsbanken and Swedbank as well as major Danish banks Jyske Bank and Sydbank also said they were not exposed.

Danish mortgage lender Nykredit, which is not listed, said it had exposure to Amagerbanken of almost 300 million crowns.