Ratings agencies are swinging left and right also aiming at Nordic banks all the more often as. Danske Bank (OMX: DANSKE) was under heaviest pressure in today’s trading after Standard & Poor's downgraded it in the morning by one notch A-/A-2 from A/A-1 on Irish property market weakness and the situation in Denmark. The rating now carries a stable outlook. Danske Bank expressed surprise on the move, given a declining trend in Irish property market related losses as of late.
If the S&P downgrade was, the latest bomb from Moody’s caused outrage. After market close it cut ratings of several Danish and Finnish banks by one to three notches. Danske Bank, Jyske Bank (OMX: JYSK) and Sydbank (OMX: SYDB) were slashed two notches deposit rating Baa1 and Spar Nord Bank (CPH: SPNO) by one notch. Several specialised credit institutions saw their ratings cut by three notches in a single go. In Finland Danske’s subsidiary Sampo Bank to deposit grade A2 and Pohjola Bank (HSE: POH1S) to baa2
Showing posts with label Danske. Show all posts
Showing posts with label Danske. Show all posts
Thursday, 31 May 2012
Friday, 11 May 2012
Danske Bank to remove national brands and do away with geographical segmenting
Denmark’s largest bank Danske Bank (OMX: DANSKE) reported quarterly earnings today. Low economic growth in most of the countries where the bank operates leads to continuing difficulties and means the group was far from fulfilling its potential. Profit before tax of 1.6 billion DKK is 0.1 billion more than a year ago and 1 billion above Q4 2011. Net profit for the period printed at 783 million (EPS of 0.8 DKK). Total income grew 6% year-year and 4% sequentially to 12.35 billion largely on the heels of trading income gains. The group did not have a single loss-making day in Q1 in Danske Markets.
Expenses were up by 6% sequentially but that is mostly due to a 500 million one-off charge stemming from the decision to start using Danske Bank name for all of the group's banking operations by the end of 2012. This means that the bank stops operating in a geographically oriented manner and allows for a more agile bank and removes the need to carry regional headquarters in all geographies, allowing for some cost cuts. More cost cutting measures are ongoing, with couple thousand people on the way out. The program is also escalated into a two-year deal.
Sampo Bank name is disappearing and the goodwill associated to the brand was the aforementioned half a billion DKK. In combination with the change, Danske Bank will also start charging monthly expenses for some additional checking accounts, so certain very old former Postipankki/Leonia – migrated customers might want to look into that. Fokus bank name in Norway, Northern Bank and National Irish bank in Ireland will disappear as well.
Loan impairment charges of 3.9 billion is up from Q1 2011 but down vs. Q4. Nevertheless the number is too high. Impairment charges are likely to remain high in 2012 since challenges remain in majority of the group's markets. Therefore low earnings are expected despite underlying earnings development that is expected to be reasonable. Operational change means that there will be three business areas going forward: Personal Banking, Business Banking targeting SME customers and Corporates & Institutions. Investors cheered escalated cost cutting program and the fact that there weren’t any major negative surprises in the report. This meant the stock closed up by around 1%.
Expenses were up by 6% sequentially but that is mostly due to a 500 million one-off charge stemming from the decision to start using Danske Bank name for all of the group's banking operations by the end of 2012. This means that the bank stops operating in a geographically oriented manner and allows for a more agile bank and removes the need to carry regional headquarters in all geographies, allowing for some cost cuts. More cost cutting measures are ongoing, with couple thousand people on the way out. The program is also escalated into a two-year deal.
Sampo Bank name is disappearing and the goodwill associated to the brand was the aforementioned half a billion DKK. In combination with the change, Danske Bank will also start charging monthly expenses for some additional checking accounts, so certain very old former Postipankki/Leonia – migrated customers might want to look into that. Fokus bank name in Norway, Northern Bank and National Irish bank in Ireland will disappear as well.
Loan impairment charges of 3.9 billion is up from Q1 2011 but down vs. Q4. Nevertheless the number is too high. Impairment charges are likely to remain high in 2012 since challenges remain in majority of the group's markets. Therefore low earnings are expected despite underlying earnings development that is expected to be reasonable. Operational change means that there will be three business areas going forward: Personal Banking, Business Banking targeting SME customers and Corporates & Institutions. Investors cheered escalated cost cutting program and the fact that there weren’t any major negative surprises in the report. This meant the stock closed up by around 1%.
Tuesday, 13 December 2011
Banking sector worries intensify, Denmark in focus
Politiken wrote on Monday that foreign investors are speculating in credit default swaps (the Danish media was a little confused about this, claiming short-selling cds, as opposed to taking a short position via cds) that Denmark will not be able to withstand escalating housing crisis. Their view is that if Danske Bank gets in trouble, Denmark does not have the finances to bail it out.
Other experts quickly and steadfastly took issue with Danske Bank being included in such news. Swedish investment firm Cevian Capital recently flagged over 5% ownership share, saying that it feels that Danske, one of the strongest Nordic banks, is not properly valued. American hedge fund Luxor Capital is in the center of this debate. The firm wrote in its Q3 report, that the combination of high Danish household debt and Danish banks reliance on foreign financing can lead to big problems as European financial crisis blows up.
Wall Street Journal wrote that reminiscent of US housing crisis blowing up, European banks have mainly sold CDS instruments protecting against defaulting European countries to other European banks. Bloomberg’s article stated that the inevitable higher capital requirements for European banks may trigger a vicious cycle of declining sovereign-debt prices and thus again coming back to haunt banks in further losses.
Other experts quickly and steadfastly took issue with Danske Bank being included in such news. Swedish investment firm Cevian Capital recently flagged over 5% ownership share, saying that it feels that Danske, one of the strongest Nordic banks, is not properly valued. American hedge fund Luxor Capital is in the center of this debate. The firm wrote in its Q3 report, that the combination of high Danish household debt and Danish banks reliance on foreign financing can lead to big problems as European financial crisis blows up.
Wall Street Journal wrote that reminiscent of US housing crisis blowing up, European banks have mainly sold CDS instruments protecting against defaulting European countries to other European banks. Bloomberg’s article stated that the inevitable higher capital requirements for European banks may trigger a vicious cycle of declining sovereign-debt prices and thus again coming back to haunt banks in further losses.
Tuesday, 9 August 2011
Danske Bank expects recovery to continue, reports Q2 numbers
Danske Bank A/S (OMX: DANSKE) net profit of 1.2 billion DKK for Q2 2011 was in line with expectations. Higher margins and strong trading income from derivates were complemented by improving insurance results at Danica. More initiatives to improve earnings will be communicated in H2 and onward. After completing a share offering in April, Danske Bank Group’s Basel II tier 1 capital ratio and total capital ratio stood at 16.6% and 18.8% on 30th of June 2011. Core Tier 1 solvency need was 12.3%.
The bank has very limited remaining funding need for 2011. One-off impairnment charged were still elevated, particularly high in Ireland and NI. Danske Bank’s PIIGS exposure remains ‘limited’ at around 10 billion DKK, with majority of it in Italy. The main gross sovereign exposure is for Denmark (38 billion), Germany (28), Sweden (20) and the UK (18).
Danske Bank expects global economic recovery to continue in the second half but only at a moderate pace in the Western world. The group could not resist another sting towards Moody’s, saying that higher OC requirement of Realkredit Danmark is in sharp contrast to 24.8 billion DKK solvency.
The bank is guiding for increased margin in Denmark, total expenses up by 3%, lower income from Danica and saying that Danske Market´’s and Danske Capital’s results are highly dependant on market developments and relative performance. The stock is down but considerably less than market index so far.
The bank has very limited remaining funding need for 2011. One-off impairnment charged were still elevated, particularly high in Ireland and NI. Danske Bank’s PIIGS exposure remains ‘limited’ at around 10 billion DKK, with majority of it in Italy. The main gross sovereign exposure is for Denmark (38 billion), Germany (28), Sweden (20) and the UK (18).
Danske Bank expects global economic recovery to continue in the second half but only at a moderate pace in the Western world. The group could not resist another sting towards Moody’s, saying that higher OC requirement of Realkredit Danmark is in sharp contrast to 24.8 billion DKK solvency.
The bank is guiding for increased margin in Denmark, total expenses up by 3%, lower income from Danica and saying that Danske Market´’s and Danske Capital’s results are highly dependant on market developments and relative performance. The stock is down but considerably less than market index so far.
Monday, 18 July 2011
Elcoteq to insolvency proceedings
Elcoteg (OMX: ELQAV) said after the bell that Elcoteq's RCF lenders have decided to accelerate the outstanding revolving credit facility despite Elcoteq’s pleas for them not to do so in connection with the planned restructuring of the companys debt via a potential deal with Platinum Equity. Elcoteq will apply for controlled management insolvency proceedings to be able to continue operations.
Danske Bank (OMX: DANSKE) gave the notice to Elcoteq and is acting as an agent on behalf of other revolving credit facility lenders RBS, SEB, Nordea, Pohjola, Banco Bilbao Vizcaya Argentaria, UniCredit Bank and HSH Nordbank.
Elcoteq is blaming the company’s lenders harshly saying as follows: “In the Company's view, the lenders' act shows total disregard of the Company's customers, suppliers and close to 7000 employees as well as other stakeholders.”. While it can be argued that it might not have been in the best interests of the lender in question to do so, lenders have every right to do just that when company does not meet its obligations.
In a bizarre twist, investors drove up Elcoteq's stock price after the Platinum Equity announcement, which contained the notice that Elcoteq is unable to repay the remaining 48.5 million Euro on its revolving credit facility. Now investors will in all likelihood feel pain stemming from that decision.
Danske Bank (OMX: DANSKE) gave the notice to Elcoteq and is acting as an agent on behalf of other revolving credit facility lenders RBS, SEB, Nordea, Pohjola, Banco Bilbao Vizcaya Argentaria, UniCredit Bank and HSH Nordbank.
Elcoteq is blaming the company’s lenders harshly saying as follows: “In the Company's view, the lenders' act shows total disregard of the Company's customers, suppliers and close to 7000 employees as well as other stakeholders.”. While it can be argued that it might not have been in the best interests of the lender in question to do so, lenders have every right to do just that when company does not meet its obligations.
In a bizarre twist, investors drove up Elcoteq's stock price after the Platinum Equity announcement, which contained the notice that Elcoteq is unable to repay the remaining 48.5 million Euro on its revolving credit facility. Now investors will in all likelihood feel pain stemming from that decision.
Friday, 15 July 2011
Nordic banks pass stress tests
European Banking Authority has published results of the 2011 EU-wide stress tests for 90 banks in 21 countries. All 10 Nordic banks involved in the latest stress tests passed comfortably. They were Nordea Bank (OMXS: NDA, OMXH: NDA1V), Skandinaviska Enskilda Banken (OMX: SEB A, STO: SEB C), Svenska Handelsbanken(OMX: SHB A) and Swedbank(OMX: SWED) from Sweden, Danske Bank (OMX: DANSKE), Jyske Bank (OMX: JYSK), Nykredit Bank and Sydbank (OMX: SYDB) from Denmark, DNB NOR (OSE: DNBNOR) from Norway and Pohjola Bank (HSE: POH1S) as a part of OP-Pohjola group from Finland.
Eight banks were below 5% Core Tier 1 T capital threshold and sixteen banks between 5% and 6% CT1R. EBA is formally recommending national supervisory authorities to require those banks under 5% CT1R to promptly remedy capital shortfall. Those failing the tests were all small banks. Five of them are in Spain, two in Greece and one in Austria.
While stricter than the tests last year, these tests have been also been blamed too soft and authorities are worried markets will view the fact that the tests do not include Greek default provision as a reason to panic. Also some have worried about the great detail that banks are revealing about their specific exposures to provide bad incentives. More information is available here.
Eight banks were below 5% Core Tier 1 T capital threshold and sixteen banks between 5% and 6% CT1R. EBA is formally recommending national supervisory authorities to require those banks under 5% CT1R to promptly remedy capital shortfall. Those failing the tests were all small banks. Five of them are in Spain, two in Greece and one in Austria.
While stricter than the tests last year, these tests have been also been blamed too soft and authorities are worried markets will view the fact that the tests do not include Greek default provision as a reason to panic. Also some have worried about the great detail that banks are revealing about their specific exposures to provide bad incentives. More information is available here.
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