Trouble in the Danish Banking sector as another Danish bank close to collapse
Sunday, 09 October 2011
Danish small bank, Max bank will most likely be phased out and operations taken over by the state, Danish banking emergency organisation. Finansiel stabilitet, a Danish- state company that assembles collapsed banks, gave the announcement late Saturday night.
Max Bank said in a statement that the bank can not live up to Danish Financial services authority’s requirements and will allow to fold unless the necessary capital could be found latest Sunday at the 18th though this is seen as impossible.
Max Bank operates in Zealand, headquartered in Nęstved and branch offices in seven locations. The bank reported first half of this year a resounding loss of Dkr60.3 million after taxes. Corresponding period last year the deficit was only Dkr5.8 million.
AdvertisementThe bank had, like several other banks extended credit to housing and agriculture. And it has resulted in losses that it can not cover:
“It's gone wrong for Max Bank, like many other banks. They have simply been too eager to lend money. They have had too many loans to include housing,” says an analyst to radio Denmark.
Bank Customers' deposits are protected by deposit insurance fund. The bank writes in a press release that it can not continue operations because the Danish Financial Supervisory Authority, Finanstilsynet, has required additional write-downs and increased the solvency requirement.
Finanstilsynet has given the bank a deadline till Sunday 18th to search for more capital. If no new capital or any other solution is found to solve the bank’s major problems then the banks would have to fold.
Max bank was already classified as a trouble bank and in principle; it was expected that it was just a matter of time for the bank to fall.
“It is hardly an option for the so-called valuation committee has previously run into a brick wall in trying to get rid of Max Bank and other banks. So what is probably happening now is that their good customers may be taken over by another bank, while the bad clients are taken over by the Financial Stability,” said an analysts to radio Denmark
By Scancomark.se Team
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