Denmark’s Finansiel Stabilitet confirms takover of FIH assets

Denmark’s Financial Stability Company (Finansiel Stabilitet) has confirmed a widely-expected deal to take over DKK17bn (€2.28bn) of property assets from FIH Erhvervsbank.

“The transaction is completed to strengthen FIH Erhvervsbank’s funding opportunities and maintain the bank’s ability to finance small and medium-sized businesses,” Finansiel Stabilitet (FS) said.

As outlined in InvestmentEurope last week, FIH faced a capitalisation crisis brought on by its reliance on Danish government guarantees. These amount to about DKK42bn (€5.6bn) and expire in 2012-2013. “The Danish state has infused hybrid core capital amounting to DKK1.9bn,” FS added.

The deal is structured in such a way that FIH is placing the affected assets into a new company, which is then acquired by FS and operated as a subsidiary. It is a method that FS has applied to assets of other banks that it has taken over in line with legislation governing the banking sector in Denmark.

“In near future, a board of directors will be appointed and an executive board will be recruited. The Financial Stability Company will furthermore enter into an agreement with FIH Erhvervsbank regarding management of these loans,” FS said.

“The company’s sole purpose will be the winding up the acquired property exposures as swiftly as possible, and in a financially justifiable and proper manner. The winding up is planned to be completed no later than by 31 December 2016 with an option to extend the period by 3 years.”

FS was established in October 2008 as part of an agreement between the Danish state and the country’s financial sector, which was struggling in the wake of the global financial crisis. So far it has taken over assets of seven financial institutions, including most recently Amagerbanken and Fjordbank Mors.

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