Denmark

Denmark's banking sector needs to consolidate in coming years to better withstand tougher international market conditions, the Danish Finance Minister said in an interview, The Wall Street Journal reported. "A structural adjustment needs to take place in the Danish banking sector, we have many small banks," Finance Minister Claus Hjort Frederiksen said. The country's banking sector is highly fragmented, counting more than 100 banks—many of which are tiny, local lenders—serving a population of just 5.6 million.

Standard & Poor's said Thursday that as many as 15 Danish banks could default due to loans made to the property and agricultural sectors from 2005 to 2007, hitting the country's ailing banking sector with another potential blow. "Denmark's banking crisis is not yet over," the credit rating institute said, Dow Jones Daily Bankruptcy Review reported. Read more. (Subscription required.)

Danish banks will have to pay out higher returns on their debt to attract international investors as Europe’s toughest insolvency laws increase funding costs and hurt profitability, a Moody’s Investors Service executive said, Bloomberg reported.

The remnants of Danish bank Amagerbanken, which fell into state hands in February, will be allowed to distribute additional funds to eligible creditors, administrators of the failed bank said on Thursday, Reuters reported. Finansiel Stabilitet, the state company that manages failed banks in Denmark, said a new valuation of Amagerbanken's assets and liabilities provided a basis for increasing payouts by about 6.7 billion Danish crowns ($1.27 billion).

Small Danish bank Fjordbank Mors asked on Friday to be taken over by government administrators and wound up after regulators ordered it to bolster its balance sheet to cover its risks, Reuters reported. Fjordbank Mors is the latest small Danish bank to fail in the wake of the financial crisis, the most significant of which were the 2008 collapse of Roskilde Bank and the downfall in February this year of Amagerbanken.

State-backed German lender HSH Nordbank AG has formed a joint venture for managing its EUR3 billion Nordic real-estate loan book with two U.S.-based property finance firms, as the bank moves forward with its restructuring efforts, Dow Jones reported. HSH has teamed with property consultants Situs Cos. and special loan servicer Helios AMC LLC to create the new joint venture, which will initially service the bank's legacy loan book over the next couple of years.

Danske Bank and four other Danish lenders have had their credit ratings cut by Moody’s after a bank collapse revealed the country’s government was willing to impose losses on depositors and senior creditors in failed banks, the Irish Times reported. The rating agency said last week’s bankruptcy of Amagerbanken, a small Danish lender, showed that Copenhagen “is now far less willing to continue to support bank creditors at the expense of taxpayers” than just a few months ago.

Small Danish bank Amagerbanken said on Sunday that it failed to meet solvency requirements and had agreed to be taken over by state administrators who will wind up the bank's remaining activities, Reuters reported. Amagerbanken, the 10th small Danish bank to fall into the state's hands due to the effects of the 2008-09 financial crisis, said in a statement that fourth-quarter writedowns had wiped out its equity. It said it had agreed to transfer its assets to Finansiel Stabilitet A/S, the state company that administers failed banks, and the administrators would close the bank.

For years, Denmark was held out as a model to countries with high unemployment. The Danes, despite their lavish social welfare state, managed to keep joblessness remarkably low. But now Denmark, which allows employers to hire and fire at will while relying on an elaborate system of training, subsidies for those between jobs and aggressive measures to press the unemployed into available openings, is facing its own strains. As a result, it is beginning to tighten up, The New York Times reported.

National Irish Bank (NIB) has set aside €146 million for loan impairment charges related to losses on commercial property transactions, The Irish Times reported. The bank, which is outside the Government's guarantee scheme, said impairment charges related to bad loans were down €52 million on last year. The Danish-owned lender today reported losses of €133 million for the first three months of the year, saying economic conditions remained “very difficult”. The bank’s total loan book was €10.2 billion, down 5 per cent on last year.