Danish Central Bank Nationalizes Roskilde Bank After Efforts to Find Buyer Failed
August 25th, 2008Via: Bloomberg:
The Danish Central Bank will lead a buyout of Roskilde Bank A/S after a slumping property market drove the lender into insolvency and a private purchaser couldn’t be found.
Roskilde will receive 4.5 billion kroner ($890 million) in cash from the central bank and Danish lenders. The purchasers will also assume 37.3 billion kroner of debt, Roskilde said in a statement yesterday. The shares were suspended in Copenhagen trading today, after falling 75 percent this year.
Writedowns on real estate loans led to a pretax loss of at least 1 billion kroner in the first half, double an estimate the bank published on July 14, Roskilde said yesterday. Denmark became the first European economy to enter a recession since the global credit crisis began, as declining property values prompted consumers to spend less. The bailout is the first by the Danish central bank in 15 years.
“The central bank views this matter with great seriousness,” Nationalbanken, as the central bank is known, said in the statement. “This acquisition will contribute to limiting the negative effect on Denmark’s financial system” of Roskilde’s failure.
Roskilde, based in the Danish city of the same name, received “unlimited liquidity” from the central bank on July 10 and the Danish Bankers Association agreed to cover as much as 750 million kroner of losses. The central bank said at the time the backing was conditional on Roskilde finding a buyer within six months.
