Denmark’s Banks Endure Writedown Shock Delaying Recovery
Denmark’s banks face larger writedowns this year than those endured in 2011 as rules enforced since April take a bigger toll on lenders than the industry predicted. http://www.bloomberg.com/news/2012-05-0 ... overy.html
“We anticipate that loan losses won’t decline in 2012,” Per Tornqvist, an analyst at Standard & Poor’s based in Stockholm, said in an interview. “There’s no doubt that the provisions need to be done, and the sooner the better, in terms of working it out of the economy.”
“Elevated risks in agricultural lending are contributing to downward pressure on the credit profiles of Danish lenders and covered bonds,” Moody’s said, as part of its review of 114 European lenders, including eight Danish banks.
Denmark is still struggling to emerge from the fallout of its property market collapse. House prices fell an annual 9 percent in February, the country’s statistics agency said last month, and by next year real estate values will have dropped 25 percent from their peak in 2007, the government-backed Economic Council said in November.
Given the frailty of bank balance sheets amid continued house price declines, lenders face an uphill battle convincing investors that Denmark won’t be the scene of further creditor losses, according to Mads Thinggaard, senior equity analyst at Copenhagen-based Nykredit Markets. He says tightening writedown rules before the crisis is over is likely to hurt the industry.
“A lot is about convincing funding markets there’s not going to be another bail-in and this won’t help,” Thinggaard said in an interview.