News that Danish banks have had their credit ratings downgraded by Moody's is leading reports in local media such as Berlingske.
News that Danish banks have had their credit ratings downgraded by Moody’s is leading reports in local media such as Berlingske.
Jyske Bank, Sydbank, Spar Nord Bank, Ringkjøbing, Landbobank and BankNordik all saw their long term rating cut as well as their rating for financial strength.
Danske Bank maintained its financial strength rating, but saw its long term rating cut.
Nordea Bank Danmark was downgraded to Aa3 from Aa2.
The background to the downgrades across the sector is rooted in new laws intended to enable depositors to remove their money when a bank fails.
When Amagerbanken went bust in February this year it became clear that the Danish government was willing to let investors take the losses associated with such an event.
That prompted Moody’s to put all Danish banks under review. Berlingske notes that the downgrades will make it more expensive for Danes to borrow money.
In associated news it has been reported that BankNordik managed to take over the remains of Amagerbanken because its bid was considered the best out of 11 bids received by Finansiel Stabilitet, the state owned company tasked with winding up distressed banks – effectively selling off assets of failed banks rescued by the Danish taxpayer.
Finansiel Stabilitet has not stated whether BankNordik’s bid was the best in terms of price, but does state that the bid represented the best overall package.
BankNordik will reportedly pay net goodwill of DKK235m (€31.5m), in return obtaining some 92,000 customers and DKK4.5bn (€603m) in loans. The 200 worst customers of Amergerbanken, representing DKK12bn (€1.6bn) in outstanding bad loans remains with Finansiel Stabilitet.