Denmark's Max Bank collapses, comes under state control
Updated: 2011-10-09 21:47
COPENHAGEN - Denmark's Max Bank came under state control after admitting it could not meet solvency and write down requirements Saturday.
"The bank can no longer continue its activities," Max Bank said in a statement Saturday night.
It explained the decision saying it cannot meet the demand for further write downs and increased solvency as required by Finansiel Stabilitet, Denmark's state-run facility for handling failed banks.
Max Bank's operations will be transferred to a new subsidiary under Finansiel Stabilitet.
The transfer came into effect on Oct 8, and took place according to recent adjustments in an existing Danish government aid package for struggling banks, Finansiel Stabilitet said.
The subsidiary will continue to serve the bank's existing customers, but trading of Max Bank A/S shares and bonds is now suspended.
Max Bank becomes the tenth Danish bank to come under state control since the 2008 financial crisis. A small bank headquartered in Naestved town, on the Danish island of Sjaelland, it had 23,000 shareholders as of 2010.
The bank registered net loss of 60.3 million Danish kroner ($10.8 million) in the first six months of this year, following 79.3 million Danish kroner ($14.2 million) in write-downs.
Analysts here believe the bank incurred losses on too many large loans, and was too expansive in its operations prior to the 2008 crisis, both factors which prompted its collapse.
In September, the Denmark's government agreed on a bank aid package, known as Bank Pack 4, that makes it easier for healthy banks to take over struggling banks.
The country is worried that more of its small banks could fail as they struggle to raise capital from international financial markets.