Danish bank sector backer of last resort makes DKK434m loss
Finansiel Stabilitet, the Danish state owned organsiation tasked with taking over and winding up failed banks made a loss of DKK434m in its first half, compared to a profit of DKK3.8bn in the same period last year.
The difference is described by the organisation as being down to changes to the levels of state guarantees that it receives.
“Iin the first half of 2010, Finansiel Stabilitet received guarantee commission in relation to the Bank Package of DKK3,750m and that Finansiel Stabilitet had a loss guarantee from the Private Contingency Association covering the initial DKK10bn lost in connection with the takeover of distressed banks under the Bank Package. After the Bank Package expired on 30 September 2010, Finansiel Stabilitet no longer receives guarantee commission, and the loss guarantee has been settled.”
Stripping out the effects of changes to guarantee levels, it adds that impairments actually improved on the year earlier period.
“Impairment losses remained at a high level, reflecting that the performance of exposures in poor financial standing deteriorated in the first six months of 2011. However, impairment losses were considerably lower compared with the same period of last year. A large part of the impairment losses of H1 2010 were attributable to Roskilde Bank (DKK 2.4 billion), for which Finansiel Stabilitet had
a loss guarantee from the Danish State. The effect of this should also be taken into account in a year-over-year comparison.”
In line with its growing portfolio of businesses taken over under the relevant legislation, Finansiel Stabilitet has also seen its assets grow to DKK76bn as of 30 June 2011.
Loans and advances accounted for DKK27bn. Amounts due from central banks and credit institutions were DKK19.9bn, and amounts due from the Danish state were DKK12.1bn.
The biggest risk to the ongoing operations of the organisation consist of non-performing loans and other such exposure. Market risk is negligable, while the organisation is not liable for losses. Any income it generates from its activities are transferred to the state through the Danish Ministry of Economic and Business Affairs.
Crucially, however, the organisation says its outlook for the remainder of 2011 is highly uncertain, in particular because it does not know what losses may develop from the banking activities it has taken over.
|Company||Date of takeover|
|EBH Bank||21 November 2008|
|Løkken Sparebank (formerly Løkken Sparekasse)||02 March 2009|
|Pantebrevsselskabet af 2. juni 2009 (formerly Gudme Raaschou Bank)||16 April 2009|
|Nova Bank Fyn (formerly Fionia Bank)||28 May 2009|
|Roskilde Bank||10 August 2009|
|Finansieringsselskabet af 11/2 2010 (formerly Capinordic Bank)||11 February 2010|
|Eik Banki Føroya and Eik Bank Danmark 2010||14 October 2010|
|Amagerbanken af 2011||5 February 2011|
|Fjordbank Mors af 2011||24 June 2011|