Small banks are under pressure in Denmark once again. As if Moody’s downgrade on Portugal and a rate hike in China weren’t enough, newspaper Børsen wrote this morning that troubled Aarhus Lokalbank (CSE: AARHUS) may lose up to 75 million DKK after it sent a large agricultural customer into bankruptcy.
The customer in question, Jørgen Zacher Sørensen, who has been until recently running the Tvilumgard estate tells Børsen that the estate has been on sale since 2009 and prior to the bankruptcy the bank was trying to sell it for 75 million. According to Jørgen Zacher Sørensen, DLR Kredit is first in line for 45 million DKK in the event of a successful sale of the estate.
Aarhus Lokalbank says there is no need for further write-downs for 2011 as a result of problems on the account. The bank made a write-down of 255 million on its loans in 2010. Aarhus Lokalbank is down 8.7% in light trading.
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