Saturday, 12 July 2008

One Danish Bank Collapse, Who's Next?



"Danish bank Roskilde Bank said on Friday it had requested and received 750 million Danish crowns ($158 million) in liquidity guarantees from Denmark's central bank, sending its shares down more than 50 percent.

Roskilde said it had realised it would have to take significantly bigger writedowns than expected in real estate loans and had put itself up for sale. The amount of writedowns was not disclosed.

The central bank said it consulted with the government, the Danish Financial Supervisory Authority and the Danish Bankers' Associations to get their support before offering the guarantee."


Danish bank are now being hit...it doesn't come at a surprise, after all their housing market is one that show the biggest bubble characteristics.

Now in Finland, let's not forget that Sampo an ex-Finnish bank has been bought by Danske Bank. Most probably a move that was required in order to absorbs more savings basically more capital...or would it be the next one to fall??

I would not be surprised to see a Finnish Bank or two, sometime next year to fall, a small one, maybe Aktia, Tapiola or others...You have to understand that the housing market should have slowdown or even fallen in 2003 but instead it carried its way up thanks to an exceptionnaly low interest rates or let's call an amazingly high policy central bank mistake.

Now, one need to sort out this mess. it's automatic with free markets through its boom and bust cycles..but this time we are seeing a lot more interventionism, especially in the US : Institution Bail-out, tax rebate etc ... the consequence are therefore unknown, the "wizards" are experimenting in an unknown field in a similar situation as the one passes the knot: for the best or the worse...


It's worth to note that U.K. "Nothern Rock" bank was nationalized after depositor run last year, it's now the turn of IndyMac BanCorp, a mortgage lender that is being taken over, today, by the U.S. regulators after a similar bank run. So the financial crisis that started last year seem to show no sign of abating, on the contrary it seems to get worse and out of control....

"U.S. banking regulators swooped in to seize mortgage lender IndyMac Bancorp Inc on Friday after withdrawals by panicked depositors led to the third-largest banking failure in U.S. history"

8 comments:

Andrew said...

Peter Schiff was totally correct so far.

The one remaining piece is higher rates.

Anybody who cannot get rid of all debt and sit this out has to be very vulnerable if Schiff is totally and absolutely correct. That sounds exstreme and must frighten many people but how will this thing now end now that it has started?

Many banks have a negative net worth now that assetts that were once supposedly like cash have been found to be illusions in todays market. They cant lend. Few can borrow.

70-95% of US mortgage lending is now going out via the GSE's. At todays market valuations they are bust. It seems like a dooms day scenario. If china now has 300 billion of these bonds then something needs to be done to create guarantees of their worth or mortgage lending in the US will simply stop and it will be cash buying only as is now the case in southern Florida.

You have to wonder. Does anybody in charge actually know what the fuck is going on??

Andrew said...

I need to open some bank accounts here so i can transfer money.

Can somebody produce a list of the top banks in order of most safest?

1. Being safest?

Thanks

Anton said...

Banks are secure up to a level which is guaranted..see previous article on this blog:

http://housingfinland.blogspot.com/2007/11/deposit-guarantee-fund-25000-euro-max.html

Nordea and Sampo are banks that are too big to fail...if there are in trouble they will be rescued at whatever cost and the lender of the last resort would be....the Tax Payer.

Andrew said...

Thanks Anton

From your link:

"Sampo is a good example of a Bank to be worried about as in March 2008, it will not be any more a Finnish bank but instead a Danish branch of Danske Bank."

Andrew said...

http://eng.novonews.lv/news/2008/07/07/latvia_en/005953.html

"Apartment prices to fall 65% in Riga"

Anton said...

Nothern Rock Collapsed in the U.K., IndyMac collapsed as well but all were rescued by the government/state so Nordea or Sampo if they fail which is unlikely will be undoubtely be rescued.

If you are really worried then why not opening an account in both banks... and get the best dealout of both in term of loan/saving etc..

By the way do not put your money in their saving account or growth account as it's very low about 3-3.5% or lower after tax but instead you can fixed it for a 12 month period at a rate 5% or 5.3%...unless you want to take bold risks and invest in the stock market... maybe it's better to have a clear signal that the current trend has reversed...

Anonymous said...

"Danish house prices will drop as much as 10% this year and next because of rising borrowing costs and too much supply - Asmussen of Handelsbanken"

Looks like the housing contagion is spreading as did the boom...

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