Banks Fail - Denmark

http://www.rte.ie/news/2011/0627/denmark-business.html

Fjordbank Mors is the nineth Danish bank to collapse following the 2008-2009 financial crisis and the second to trigger a state-managed closure in which senior bondholders as well as shareholders will bear part of the losses.

The Danish system contrasts with bank bail-outs across Europe, including Ireland.

'We will not be involved with state aid,' Minister for Economic and Business Affairs Brian Mikkelsen said on Danish television. 'We think that it is not reasonable to give state crowns to banks that are run badly and have got themselves involved in risky businesses and lost money on that,' Mikkelsen said.

'It is not us as Danes that should pay for that,' he added.

Mikkelsen said that banks would continue to pay the costs of government bank aid packages.

Payment for Fjordbank Mors' assets was set at a preliminary 7.8 billion Danish crowns ($1.48 billion), corresponding to about 74% of unsecured senior liabilities, the FSA said in a statement.

'Creditors, including depositors with deposits exceeding €100,000 in Fjordbank Mors must therefore anticipate losses of approximately 26% as the bank closes,' the FSA said.

We really should have done things that way

krissovo

Just shows why Denmark (closely followed by Sweden, Finland & New Zealand) is the lowest rated corruption (perception) country on the planet.

The MP's had nothing to hide so why bail them out!

charlemont

But sure we had to do things the awkward way..

Scofflaw

charlemont wrote: »

But sure we had to do things the awkward way..

Unlike Denmark, we didn't even have a process for winding up banks.

cordially,
Scofflaw

Cookie_Monster

Scofflaw wrote: »

Unlike Denmark, we didn't even have a process for winding up banks.

cordially,
Scofflaw

unlike Denmark we don't have a lot of simple sensible things that works as they are supposed too

Why oh why could we not have done this...

Manach

It would have been too sensible?

Nijmegen

bluewolf wrote: »

Why oh why could we not have done this...

A failure of imagination.

DJCR

Well judging from what we have seen, if we did this we would have been left in a position whereby there would be no such thing as an Irish Bank (Unless you include Ulsterbank which I think is RBS).

I think it's important to have our own banks, of course it's also important not to have donkeys managing them.

Cookie_Monster

DJCR wrote: »

I think it's important to have our own banks, .

why?

I can't see the need personally.

_Kaiser_

Nijmegen wrote: »

A failure of imagination.

A failure of people..

The Irish people (and thus by extension, the politician's they elect) are still by nature "cute hoor's" - too busy trying to get one over on each other and "the system" while parading their (borrowed) wealth for the neighbours - to ever stop and think about what is best for the collective whole.

As a result of this, and the policies of successive populist governments, we came to believe that we were "the chosen race" - that the good times of free money would roll forever and that every Tom, Dick and Harriette could become a property magnate.

Sure there was the occasional scandal, and corruption (in both public office and officialdom in general - the HSE, the gardai and so on) but sure isn't that just the "Oirish" way :rolleyes:

Naturally of course, as history has shown repeatedly, the good times DIDN'T roll and when the crash came, it hit hard - but true to form the government of the Irish kept things limping along long enough that they, their friends and supporters could take their money out while keeping the sheep occupied with arguments of public vs private sector and employed vs unemployed.

Now that the ship is truely sinking, the Irish scurry for cover, blaming each other for the mess and looking for someone else to pay for it (bailouts, debt forgiveness etc).

We've had Independence for just under 100 years and I think it's not unreasonable to say that the Grand Experiment has failed.
We're simply not mature enough as a people to be let at the controls of governance, and tied as we are to Europe, we will be made pay for as long as possible to protect the interests and gambing debts of others until the whole EU experiment collapses (which I believe it probably will yet).

Maybe then a new Irish/Ireland will rise from the ashes, humbled by these experiences and modelled more after places like Denmark - but I think we still have further to fall before this happens and it's those who ARE trying to get by, who didn't "go mad" in the Good Times who will suffer most in the interim.

spank_inferno

Is this because Denmark has loads of small banks?

Perhaps we didn't do this because things were so f*cked up we would have been left with no financial institutions and our banking system would collapse

(because though outside banks could enter the market that would take time)

serfboard

spank_inferno wrote: »

Is this because Denmark has loads of small banks?

Perhaps we didn't do this because things were so f*cked up we would have been left with no financial institutions and our banking system would collapse

Indeed. Which is why we should not have had a system where we had banks which were "too big to fail".

Lots of small banks is the answer. If it had only been, say, Irish Nationwide and EBS then they could (would?) have been allowed to fail without contagion.

AIB and BOI should be broken up - AIB into the constituent parts from which it came.

AlekSmart

Kaiser2000 wrote: »

A failure of people..

The Irish people (and thus by extension, the politician's they elect) are still by nature "cute hoor's" - too busy trying to get one over on each other and "the system" while parading their (borrowed) wealth for the neighbours - to ever stop and think about what is best for the collective whole......

......Now that the ship is truely sinking, the Irish scurry for cover, blaming each other for the mess and looking for someone else to pay for it (bailouts, debt forgiveness etc).

We're simply not mature enough as a people to be let at the controls of governance, and tied as we are to Europe, we will be made pay for as long as possible to protect the interests and gambing debts of others until the whole EU experiment collapses (which I believe it probably will yet).

Maybe then a new Irish/Ireland will rise from the ashes, humbled by these experiences and modelled more after places like Denmark - but I think we still have further to fall before this happens and it's those who ARE trying to get by, who didn't "go mad" in the Good Times who will suffer most in the interim.

Well Said Kaiser 2000,and all unpalatably true.

I remember back in 2005,meeting a group of Danish guys who were working in the maintenance area.

As we shared a few beverages,it rapidly became apparent that they came from a truly different place indeed...perhaps even a different planet.

From memory,their tax rate was around 40% with a substantial Health Insurance Contribution on top of that.

Their wage rates were lower,they had fewer children and of the group of perhaps ten lads,only ONE was buying a house (:eek:)

The other difference I felt was,whilst they had expectations of stuff working they did not have any well developed sense of entitlement to the same stuff.

Oh and I think,at the time the Danes were very happy with our cheap booze....€5 a pint back then in Legoland it seems.

Nothing scientific or important, but Kaiser is correct I feel...it's a personality thing...religion perhaps....or just plain thickness ?

Scofflaw

serfboard wrote: »

Indeed. Which is why we should not have had a system where we had banks which were "too big to fail".

Lots of small banks is the answer. If it had only been, say, Irish Nationwide and EBS then they could (would?) have been allowed to fail without contagion.

AIB and BOI should be broken up - AIB into the constituent parts from which it came.

Sure - the justification given for saving Anglo was that allowing it to fail would have taken down AIB and BOI, and those two between them handle 70% of the transactions in the Irish economy (about 35% each), so there's no way they could be allowed to fail.

I'd be happy to see a cap on the size of banks - call it redundancy, given I consider them a utility - and a restriction on cross-holdings of risk. It won't happen, of course.

cordially,
Scofflaw

jmayo

Scofflaw wrote: »

Unlike Denmark, we didn't even have a process for winding up banks.

cordially,
Scofflaw

Probably the best bank winding processes in the world.

DJCR wrote: »

Well judging from what we have seen, if we did this we would have been left in a position whereby there would be no such thing as an Irish Bank (Unless you include Ulsterbank which I think is RBS).

Ulster Bank is RBS, NIB is Danske and ACC is Rabobank.
And guess what they are the only ones appearing to go after some of the priviledged ones that owe them wads of cash.
That would be unlike the ones WE now own.

DJCR wrote: »

I think it's important to have our own banks ...

Why ?
What is the advantage if they offer cr** overpriced services as ours have for generations.
Our banks only ever did favours for the connected few.

I have seen the way Irish banks treated small Irish companies.
Of course these were companies not involved in property so maybe that was where they were going wrong. :rolleyes:

The argument is a bit like Aer Lingus.
Some lament it's demise whereas the rest of us couldn't care as we remember when they charged a months wages to fly across the Irish sea, all the while lavishing freebies on their staff.

ninty9er

blindjustice wrote: »

http://www.rte.ie/news/2011/0627/denmark-business.html






We really should have done things that way

Hindsight is 20/20. I'm sure if you asked Brian Lenihan on his deathbed he would have said that he would have done things differently.

Rubik.

There are differences, Denmark has over 100 financial institutions and the ones that failed are relatively small banks.

Scofflaw

jmayo wrote: »

Probably the best bank winding processes in the world.

Winds down the parts of the banking sector other countries cannot reach.

cordially,
Scofflaw

Tipp Man

Rubik. wrote: »

There are differences, Denmark has over 100 financial institutions and the ones that failed are relatively small banks.

A very very important difference.

Would Denmark apply the same rules to Dankse for instance??

later12

This bank has €1bn in assets and just over 400 depositors (yes, banks really can be this small!) and its depositors will take haircuts.

The average depositor haircut is going to be about 25%.

https://www.creditsights.com/CreditSights/Templates/HomeMTemplate.aspx?NRMODE=Published&NRNODEGUID={338FA5B0-54E1-4989-8F27-6AE0A460FB61}&NRORIGINALURL=/research.htm&NRCACHEHINT=NoModifyGuest

Godge

DJCR wrote: »

Well judging from what we have seen, if we did this we would have been left in a position whereby there would be no such thing as an Irish Bank (Unless you include Ulsterbank which I think is RBS).

I think it's important to have our own banks, of course it's also important not to have donkeys managing them.

The misguided Fianna Fail sense of patriotism. We need an Irish airline, an Irish sugar company, an Irish nitrogen factory, an Irish oil refinery etc. all examples of failed State-owned companies.

Just like we need Irish banks, that smalltown mentality that our own something is better than a foreign-owned something has done so much damage to this country.

Scofflaw

Tipp Man wrote: »

A very very important difference.

Would Denmark apply the same rules to Dankse for instance??

Almost certainly not. The Danish state put 15.2bn crowns (c $2.9bn) into Amagerbanken as part of its windup, and probably the same for Roskilde, which was the first biggish bank to fail. Amagerbanken was the 10th biggest lending bank in Denmark, Roskilde the 8th.

A bank like Fjordbank, which is the latest collapse, isn't anything like that scale - the funding shortfall is 700m crowns (about $133m). If we had a bank that size, I suspect we'd have no difficulty letting it fail either.

cordially,
Scofflaw

D1stant

Godge wrote: »

The misguided Fianna Fail sense of patriotism. We need an Irish airline, an Irish sugar company, an Irish nitrogen factory, an Irish oil refinery etc. all examples of failed State-owned companies.

Just like we need Irish banks, that smalltown mentality that our own something is better than a foreign-owned something has done so much damage to this country.

I know what you are saying and I agree to an extent, but some assets are strategic. Airlines, power, telecoms, water and.... banks

Basically if something is a utility - then the state has to have a controlling share in that. As inneficient as it is we just have to. If its done well it can work (ESB). But I dont want us moving to a US free market model whereby its every man for himself and big multinational profits against the nations interest.

DJLJ

D1stant wrote: »

I know what you are saying and I agree to an extent, but some assets are strategic. Airlines, power, telecoms, water and.... banks

Basically if something is a utility - then the state has to have a controlling share in that. As inneficient as it is we just have to. If its done well it can work (ESB). But I dont want us moving to a US free market model whereby its every man for himself and big multinational profits against the nations interest.

What makes telecoms or banks strategic assets? A country like Denmark doesn't own a bank or has interests in it, same goes for telecoms.

D1stant

Well Eircom for example. If that hadn't been put into private hands we might have a proper broadband system in Ireland. All of Ireland. instead of a private company cherry picking where its profitable to put in a second rate system

We also need our own banks, but only if they are controlled and regulated properly - that goes for any strategic asset. What would have happened if Lehman's were the AIB of Ireland?

later12

Godge wrote: »

The misguided Fianna Fail sense of patriotism. We need an Irish airline, an Irish sugar company, an Irish nitrogen factory, an Irish oil refinery etc. all examples of failed State-owned companies.

Yes, older Fianna Fail administrations were involved in setting up these companies - some of which I happen to think were done wisely - but you have to remember that in every single case, it was a more recent FF government who dismantled them or privatised them.

The notion that the banks were privatised out of some sort of misguided patriotic ideal is a load of rubbish. If the Irish banks had 400 odd depositors each, and had assets of about 1 billion euro, you might have a point.

DJLJ

D1stant wrote: »

Well Eircom for example. If that hadn't been put into private hands we might have a proper broadband system in Ireland. All of Ireland. instead of a private company cherry picking where its profitable to put in a second rate system

We also need our own banks, but only if they are controlled and regulated properly - that goes for any strategic asset. What would have happened if Lehman's were the AIB of Ireland?

I don't agree, lets agree to disagree on this.

Chuck Stone

D1stant wrote: »

I know what you are saying and I agree to an extent, but some assets are strategic. Airlines, power, telecoms, water and.... banks

Basically if something is a utility - then the state has to have a controlling share in that. As inneficient as it is we just have to. If its done well it can work (ESB). But I dont want us moving to a US free market model whereby its every man for himself and big multinational profits against the nations interest.

State Monopolies suck. Aer lingus used to fleece people before Ryaniar came along. Does anyone remember how much Eircom used to charge when they brought out mobile phones first? I think it was as much as IR£1 per minute (no competition).

The ESB has enjoyed a monopoly until 2005 so it can't really be held up as an example of successful state 'enterprise'. It was a successful monopoly for the ESB and it's staff. I don't know if it could be described as a success for the wider public.

D1stant

No one is discussing the merits (if there are any) of monoploies per se. Just the pro/cons of state controlled strategic assets. Thats does not exclude private competition

AlekSmart

Jmayo: Ulster Bank is RBS, NIB is Danske and ACC is Rabobank.
And guess what they are the only ones appearing to go after some of the priviledged ones that owe them wads of cash.

And,its worth recalling that these three entities were out of the traps as soon as we went pear-shaped....right from the word GO !

It would seem to indicate that their management's had their game-plan sorted well in advance of our Implosion...and that indicates a degree of,what once was a bankers pre-requisite, even here......Prudence !

amacachi

Maybe just a little off-topic but I heard somewhere on RTE that foreign banks are all looking to wind-up Irish operations. What's the reason for this, is it because they can't compete with guaranteed banks or do they foresee far worse circumstances down the line? I would have thought all things being equal (and safe-ish) that now would be a good time to open here given the ambivalence many have towards "our" banks.

Scofflaw

amacachi wrote: »

Maybe just a little off-topic but I heard somewhere on RTE that foreign banks are all looking to wind-up Irish operations. What's the reason for this, is it because they can't compete with guaranteed banks or do they foresee far worse circumstances down the line? I would have thought all things being equal (and safe-ish) that now would be a good time to open here given the ambivalence many have towards "our" banks.

I don't think that's accurate. Ulster (RBS, which in turn is owned by the UK government after their bailout) has had heavy impairment charges on its Irish loans, but I don't think they're withdrawing from the market. Neither, as far as I know, are Rabo or Danske, neither of which had particularly heavy losses. The one that has withdrawn is Bank of Scotland (Ireland), which, confusingly, is actually owned by Lloyds.

I would have to say that neither RBS/Ulster nor BoS(I) were particularly prudent in the Irish market - instead, they behaved much as did our own banks, but the UK taxpayer is covering their losses rather than us. The continental banks do appear to have been prudent.

cordially,
Scofflaw

Tipp Man

Scofflaw wrote: »

I don't think that's accurate. Ulster (RBS, which in turn is owned by the UK government after their bailout) has had heavy impairment charges on its Irish loans, but I don't think they're withdrawing from the market. Neither, as far as I know, are Rabo or Danske, neither of which had particularly heavy losses. The one that has withdrawn is Bank of Scotland (Ireland), which, confusingly, is actually owned by Lloyds.

I would have to say that neither RBS/Ulster nor BoS(I) were particularly prudent in the Irish market - instead, they behaved much as did our own banks, but the UK taxpayer is covering their losses rather than us. The continental banks do appear to have been prudent.

cordially,
Scofflaw

On Rabobank (ACC) I think that they got lucky that they weren't in as deep as AIB or BOI. Anecdotal evidence i know but my brother wanted to get an agricultural loan from them - he was told that ACC no longer had any interest in agriculture and were only lending to the construction sector - and they didn't mince their words when saying it. We had an impeccable lending record with ACC yet they just weren't interested.

To further highlight this they closed the cash desk in many branches which for us meant that if we wanted to lodge money we had to drive 50 miles to do so. They had no interest in day to day banking or in run of the mill business.

I believe the only reason they aren't in as much s##t as AIB or BOI is that they were a bit slower out of the traps when jumping into the property sector and were starting from a smaller base, had they had more time then i think they would have gotten themselves into a fine mess again

Ironically they have been trying to resurrect their "relationship" with us in the last 18 months

DJCR

Godge wrote: »

The misguided Fianna Fail sense of patriotism. We need an Irish airline, an Irish sugar company, an Irish nitrogen factory, an Irish oil refinery etc. all examples of failed State-owned companies.

Just like we need Irish banks, that smalltown mentality that our own something is better than a foreign-owned something has done so much damage to this country.

It is not a misguided sense of Patriotism at all.

Firstly, what i said was related to banks and banks only. I said nothing about Sugar or Nitrogen although I do believe we should **** Shell out of the country and take back our oil (Small minded enough for you).

It's amazing how, people complain about the fact we have lost control of our own fiscal position and are relying on foreign money to keep ourselves going. Yet given the choice, would like to have no Irish Bank and therefore be permanently borrowing from foreign jurisdictions and putting our savings into the hands of foreign powers, whom as we can see, even with our EU friends will screw us over with penal interest rates (and that was soverign nations imposing that - not bondholders withdrawing their cash, which of course is another option for the soverign nations of the IMF and the EU).

So please, forgive my FF small mindedness and and thinking that Foreign Shareholder owned/Foreign owned banks do not have our best interests at heart.

Perhaps this is more of the FG/Lab wishful thinking that would have resulted in the interest rate being dropped as per Noonans announcement.

DJCR

DJCR wrote: »

So please, forgive my FF small mindedness and and thinking that Foreign Shareholder owned/Foreign owned banks do not have our best interests at heart.

As opposed to the behaviour of our own banks which has clearly demonstrated that they do have our best interests at heart...?

DJCR

jmayo wrote: »

Why ?
What is the advantage if they offer cr** overpriced services as ours have for generations.
Our banks only ever did favours for the connected few.

I have seen the way Irish banks treated small Irish companies.
Of course these were companies not involved in property so maybe that was where they were going wrong. :rolleyes:

The argument is a bit like Aer Lingus.
Some lament it's demise whereas the rest of us couldn't care as we remember when they charged a months wages to fly across the Irish sea, all the while lavishing freebies on their staff.

It is true that they have not been very business friendly of late but that is a natural economic cycle after a crash seen as they "were" privately owned their shareholders want to make sure that their investments are safe before giving out any more money (in the case of Irish banks the damage was evidently done years ago and no one actually knew how bad it was until now)

However, now that we actually own the banks (Irish Government is the major shareholder), I'm constantly wondering why, seen as the government is the major shareholder they keep saying banks must lend to businesses and banks need to be more supportive. Direct them to do!!!! If they refuse to, set up a government led task force to decide whether an application should go through or not (as banks are naturally still hesitant to give out money, employees fearing for their own jobs etc). Fianna Fail set up an appeals system but this hasn't gone far enough......... the government need to get into the banks and actually take control of them.

Aer Lingus... meh.

DJCR

bluewolf wrote: »

As opposed to the behaviour of our own banks which has clearly demonstrated that they do have our best interests at heart...?

We didn't own our own banks - Shareholders did. I ment the royal we, as in we the people of Ireland (the Government now owns the bank i.e. Us)

Solnskaya

Possibly it is down to the fact that the Danes are a race of very pragmatic and honest people with excellent business sense. I know, I work with a lot of them and they are straight as arrows. They would have no time for our messing and fiddling and good lads clubs.

Liam Byrne

amacachi wrote: »

Maybe just a little off-topic but I heard somewhere on RTE that foreign banks are all looking to wind-up Irish operations.

Hopefully not, because I wouldn't trust any of the Irish banks with whatever little amount of cash I have left after being forced to foot their bills.

If the foreign ones leave I'll be dealing in cash only.