From FT - Aplaville today.
Another Danish bank — Fjordbank Mors — has been taken over by Denmark’s Finansiel Stabilitet as part of of the so-called ‘Bank Package III’ bail-in rules passed last year. The bank wind-up rules mean investors in failed banks’ senior debt, and even depositors, will be exposed to losses.
The first to fail under Denmark’s new resolution rules was, of course, Amagerbanken, early this year.
In that sense the failure of Fjordbank is more of the same. According to independent research firm CreditSights, Finansiel Stabilitet has given Fjordbank’s assets a preliminary valuation of DKK 7.8bn (€1bn) — which would cover about 74 per cent of senior liabilities. In other words, investors in the bank’s senior debt and the 450 or so deposit holders of Denmark’s €100,000 limit are looking at a haircut of about 26 per cent — somewhat lower than Amagerbanken’s 41 per cent.
Don’t be fooled by the repetition, however. There had been some talk of the Danish government backing off burdensharing for senior bank bondholders, or at least making it easier for healthy banks to buy troubled ones, after a spate of ratings downgrades and rising funding costs. But with the take-over of Fjordbank Mors it looks like Denmark is fully set on senior losses, at least for this small bank.
Another Danish bank — Fjordbank Mors — has been taken over by Denmark’s Finansiel Stabilitet as part of of the so-called ‘Bank Package III’ bail-in rules passed last year. The bank wind-up rules mean investors in failed banks’ senior debt, and even depositors, will be exposed to losses.
The first to fail under Denmark’s new resolution rules was, of course, Amagerbanken, early this year.
In that sense the failure of Fjordbank is more of the same. According to independent research firm CreditSights, Finansiel Stabilitet has given Fjordbank’s assets a preliminary valuation of DKK 7.8bn (€1bn) — which would cover about 74 per cent of senior liabilities. In other words, investors in the bank’s senior debt and the 450 or so deposit holders of Denmark’s €100,000 limit are looking at a haircut of about 26 per cent — somewhat lower than Amagerbanken’s 41 per cent.
Don’t be fooled by the repetition, however. There had been some talk of the Danish government backing off burdensharing for senior bank bondholders, or at least making it easier for healthy banks to buy troubled ones, after a spate of ratings downgrades and rising funding costs. But with the take-over of Fjordbank Mors it looks like Denmark is fully set on senior losses, at least for this small bank.