Danish bank Sydbank, the country’s third-largest listed lender, has agreed to take over all activities of local rival Tonder Bank.
The deal came after late last week after Denmark’s Financial Supervisory Authority (DFSA) found a need for impairments on Tonder’s exposures, and the bank didn’t have enough capital to continue as an independent company, Sydbank announced on 2 November.
Under the agreement, Sydbank will take over around 18,000 customers and a balance sheet of around Danish kroner (DKK) 2.3bn. Over the past few weeks, the regulator inspected Tonder’s exposures and demanded additional writedowns, the bank added. Tonder was obliged to give up its independence as it was not possible to raise the necessary capital within the regulator’s timeframe. Sydbank added that the takeover will strengthen its position in the Southern Jutland region.
Tonder is the latest casualty of more than a dozen Danish regional lenders since 2008, since the country’s housing bubble burst. Continued declines in property values, and a struggling farming industry, have triggered deeper impairments.
The FSA placed a lower valuation of securities within agriculture, other corporate exposures and real estate compared with Tonder’s own views, the authority said. Last month, FSA director, Ulrik Noedgaard, confirmed that about 3.2% of Denmark’s banks, which total around 105, are under “intensified supervision due to potential solvency problems.”
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