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AMAGERBANKEN - $2.8 Billion Bank Failure In Denmark: Senior Bondholders Whacked 41%
It may turn out to be the most important bank you've never heard of.
Amagerbanken was taken over by the Danish government today. As with the Irish banks, Amagerbanken suffered huge losses on loans to property developers and investors in commercial real estate. But the rescue comes under new regulations which stipulate steep losses for bondholders. According to Bloomberg, senior bondholders and depositors over the insured limit will face losses of approximately 41%.
Some bondholders, however, still fall under a government guarantee, but expect Amagerbanken to be held up as an example by those who favor haircuts for bondholders rather than bailouts. In particular, we can expect Ireland's Fine Gael party (pronounced feena gail) to point to Denmark when they make their own case for unilaterally restructuring Ireland's bank debt. And when they do, the cat will be out of the bag.
For two years, central bankers and government finance ministers (who know next to nothing) have been claiming that the sky will fall and there will be tanks in the streets if bondholders are forced to take losses. Clearly that is not the case. First Iceland, then Denmark, then Ireland. After that, the race is on.
From Reuters
COPENHAGEN, Feb 7 (Reuters) - Denmark was lumbered with a $2.8 bln bill on Monday as Amagerbanken (AMBA.CO) became the country's tenth bank to fall into the state's hands in the wake of the global financial crisis.
Amagerbanken said on Sunday it would transfer its assets to Finansiel Stabilitet A/S, the state company that administers failed banks, and administrators would close the bank.
Amagerbanken, which was Denmark's eighth biggest bank in terms of lending, said fourth-quarter writedowns wiped out its equity, attributing a large part to failed property investors. [ID:nLDE7150JC]
The failure of Amagerbanken was roughly the same size as the mid-2008 collapse of Roskilde Bank, previously the biggest Danish bank failure.
The bill to the government for taking over Amagerbanken is 15.2 billion Danish crowns ($2.8 billion), which is the price that the state administrating company Finansiel Stabilitet will pay for the remaining assets.
The Danish banking industry will cover 2.2 billion crowns of that cost through the country's depositary guarantee scheme, Amagerbanken Chairman Niels Heering told a news conference.
If total losses from Amagerbanken rise above 15.2 billion crowns, Danish financial institutions would have to bear a larger burden than 2.2 billion, Heering said.
http://dailybail.com/home/amagerbank...ior-bondh.html
Trichet Says 'No Haircuts' For Billionaire Bondholders: "The Plan For Ireland Has Already Been Approved By The World"
Words, like body language, can be subtle.
But Jean-Claude Trichet has made very clear his opposition to haircuts for secured and unsecured bank creditors. In response to Fine Gael's plan to unilaterally restructure Ireland's debt, Trichet insisted today that the bailout plans for Ireland's banks have already been decided and that "the plans have to be executed."
Look forward to a bank bailout and bondholder showdown in the coming weeks.
--
Source - Irish Times
Trichet Reiterates Opposition to Irish Debt Restructuring
EUROPEAN CENTRAL Bank (ECB) chief Jean-Claude Trichet has reiterated his opposition to any debt restructuring by Ireland, saying the terms of the EU-IMF bailout plan for the State have been approved by “the entire world.”
As top ECB officials closely observe the Irish election campaign, this was the second time in five days that Mr Trichet made the case against any restructuring of Ireland’s debt. He relayed the same message last Thursday immediately after the monthly meeting of the bank’s governing council.
In Brussels yesterday, Mr Trichet said the Irish rescue plan and that of Greece did “not comprehend” the notion of bondholders being compelled to take a “haircut” on their investments. Ireland entered an €85 billion EU-IMF programme last November and Greece was bailed out to the tune of €110 billion last May.
http://dailybail.com/home/trichet-sa...s-the-pla.html
It may turn out to be the most important bank you've never heard of.
Amagerbanken was taken over by the Danish government today. As with the Irish banks, Amagerbanken suffered huge losses on loans to property developers and investors in commercial real estate. But the rescue comes under new regulations which stipulate steep losses for bondholders. According to Bloomberg, senior bondholders and depositors over the insured limit will face losses of approximately 41%.
Some bondholders, however, still fall under a government guarantee, but expect Amagerbanken to be held up as an example by those who favor haircuts for bondholders rather than bailouts. In particular, we can expect Ireland's Fine Gael party (pronounced feena gail) to point to Denmark when they make their own case for unilaterally restructuring Ireland's bank debt. And when they do, the cat will be out of the bag.
For two years, central bankers and government finance ministers (who know next to nothing) have been claiming that the sky will fall and there will be tanks in the streets if bondholders are forced to take losses. Clearly that is not the case. First Iceland, then Denmark, then Ireland. After that, the race is on.
From Reuters
COPENHAGEN, Feb 7 (Reuters) - Denmark was lumbered with a $2.8 bln bill on Monday as Amagerbanken (AMBA.CO) became the country's tenth bank to fall into the state's hands in the wake of the global financial crisis.
Amagerbanken said on Sunday it would transfer its assets to Finansiel Stabilitet A/S, the state company that administers failed banks, and administrators would close the bank.
Amagerbanken, which was Denmark's eighth biggest bank in terms of lending, said fourth-quarter writedowns wiped out its equity, attributing a large part to failed property investors. [ID:nLDE7150JC]
The failure of Amagerbanken was roughly the same size as the mid-2008 collapse of Roskilde Bank, previously the biggest Danish bank failure.
The bill to the government for taking over Amagerbanken is 15.2 billion Danish crowns ($2.8 billion), which is the price that the state administrating company Finansiel Stabilitet will pay for the remaining assets.
The Danish banking industry will cover 2.2 billion crowns of that cost through the country's depositary guarantee scheme, Amagerbanken Chairman Niels Heering told a news conference.
If total losses from Amagerbanken rise above 15.2 billion crowns, Danish financial institutions would have to bear a larger burden than 2.2 billion, Heering said.
http://dailybail.com/home/amagerbank...ior-bondh.html
Trichet Says 'No Haircuts' For Billionaire Bondholders: "The Plan For Ireland Has Already Been Approved By The World"
Words, like body language, can be subtle.
But Jean-Claude Trichet has made very clear his opposition to haircuts for secured and unsecured bank creditors. In response to Fine Gael's plan to unilaterally restructure Ireland's debt, Trichet insisted today that the bailout plans for Ireland's banks have already been decided and that "the plans have to be executed."
Look forward to a bank bailout and bondholder showdown in the coming weeks.
--
Source - Irish Times
Trichet Reiterates Opposition to Irish Debt Restructuring
EUROPEAN CENTRAL Bank (ECB) chief Jean-Claude Trichet has reiterated his opposition to any debt restructuring by Ireland, saying the terms of the EU-IMF bailout plan for the State have been approved by “the entire world.”
As top ECB officials closely observe the Irish election campaign, this was the second time in five days that Mr Trichet made the case against any restructuring of Ireland’s debt. He relayed the same message last Thursday immediately after the monthly meeting of the bank’s governing council.
In Brussels yesterday, Mr Trichet said the Irish rescue plan and that of Greece did “not comprehend” the notion of bondholders being compelled to take a “haircut” on their investments. Ireland entered an €85 billion EU-IMF programme last November and Greece was bailed out to the tune of €110 billion last May.
- “We have plans. The plans have to be executed, have to be implemented in the best fashion possible as has been the case the world over and it is very, very important in my opinion not to confuse things,” he said.
- “We have a programme, approved by the international community, approved by the IMF board, the entire world, approved by the European [Union], approved and financed by the IMF and the European [Union].
http://dailybail.com/home/trichet-sa...s-the-pla.html