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Danish Economists fear more banks may go down in 2012
Friday, 06 January 2012
Danish economist fear that it is far from over with bank failures or forced mergers in the Danish banking world.

In 2012, it is reported that the country’s leading economist look forward to a series of additional bank failures, according to a variety of assessment made by the country’s leading economist as reported the Danish news agency Ritzau.

They assess that somewhere between two and 10 Danish banks would turn the key or let themselves be taken over by others before the year's end.

“Some banks have found it difficult to meet the solvency requirements in recent years and the financial markets are not in any way thawed,” said Danish Metals chief economist Allan Lyngsø Madsen to the new agency Ritzau.

“It makes it difficult for those banks that do not have the best reputation, attracting the necessary capital. This means that they are forced to look around for merger partners, according to the view held by the 39 economists who participated in the survey from Ritzaus Economic Panel.

Allan Lyngsøe Madsen emphasizes that the economic crisis makes banks' situation even more difficult.
The increased hardship is driven by the fact that the security of bank lending to the private sector has become becomes poorer, while security for loans to enterprises and agriculture is also becoming weaker.

“If we are looking forward for the next six months to the whole year, we expect that the arrow (on unemployment for example) has to be pointing up, both in general terms and for our own territory. We must enter the last part of the year and 2013 before employment turns in the right direction,” says Allan Lyngsø Madsen

A fifth of those economists surveyed expect that  five banks will close or be forced to merge, while 15 percent, including Allan Lyngsø Madsen expects that it will happen for the about 10 or more banks.

None of the 40 economists on the panel believe that Denmark will be free from completely of bank closures this year.

In 2011 there was scare in the Danish banking sector when Amagerbanken, Fjordbank Mors and Max Bank were forced to close and the state settlement company for collapsed banks, Finansiel Stabilitet took them over.

It was a year that there was increased mergers in some smaller banks, including Sparekassen Limfjorden and Sparekassen Vendsyssel merged whuile Østjydsk Bank took over Fruering-Vitved Sparekasse.

In addition, the Financial Stability in a number of cases sold the healthy parts of the acquired banks to other players in the industry.
Thus Faroese BankNordik bought a large chunk of Amagerbanken, while Jyske Bank has taken over most of Northern Bank Mors' customers and Sparekassen Zealand has bought most of Max Bank.

When the previous government in late summer last year created the Banking Package IV (Bankpakke IV) the purpose was just to encourage banks to join forces in order to get stronger. Bank package means that a solid bank can get a so-called dowry if it takes over a failing bank.
By Scancomark.se Team

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