Danish Roskilde Bank, which was ruined by the international financial crisis, will be taken over by the Central Bank of Denmark in partnership with a group of Scandinavian financial institutions.
Denmark's troubled Roskilde Bank will be bought by the country's central bank in a partnership with a group of Scandinavian financial institutions, a statement said Sunday.
"Danmarks Nationalbank and the financial sector in Denmark have entered into an agreement with the board of directors of Roskilde Bank A/S, via a new bank, on buying all assets and taking over all debt and other liabilities, except from hybrid core capital and subordinated loan capital in Roskilde Bank A/S," the central bank statement said.
"The auditing of Roskilde Bank's interim report has revealed additional losses in the bank to the extent that Roskilde Bank does not meet solvency requirements," it added.
Under the agreement Denmark's Nationalbank and Det Private Beredskab were to contribute approximately 4.5 billion kroner (603 million euros, 890 million dollars) in capital base.
"The takeover of Roskilde Bank follows the fact that no offers, domestic or foreign, were received after a thorough sales process on either all or parts of Roskilde Bank," said the statement.
Denmark's Nationalbank said it "sees the Roskilde Bank situation as very serious.
"It is expected that the takeover of Roskilde Bank will contribute to limiting the negative effect on the Danish financial system."
The operations of Roskilde Bank are to continue in a new bank under the same name.
The statement said the government confirmed that it supports the arrangement and that it would submit a new document to the finance committee of the Folketing (parliament) concerning a government guarantee to cover any losses the Danish Nationalbank may suffer in connection with the takeover and the discontinuation of Roskilde Bank.
After Roskilde was hit by the global credit crunch and a crisis in the Danish housing market, the Danish central bank gave Roskilde an emergency credit line last month, guaranteed by private investors and the state.
Bailouts are rare in Denmark, where the central bank has only rescued a handful of banks in crisis since World War II.
Roskilde needed a bailout to stay afloat after it said it would have significantly bigger writedowns than expected on its real estate loans and had put itself up for sale. The amount of writedowns was not disclosed.
Date created : 2008-08-25