In the course of a major review of 114 European financial institutions that was announced on 15 February 2012, Moody’s Investors Service has lowered the Danske Bank Group’s ratings.
As part of a series of ratings changes for Danish banks, Moody’s reduced Danske Bank’s long-term rating from A2 to Baa1 and its short-term rating from P-1 to P-2. The outlook was adjusted upwards, from “negative” to “stable”.
In its announcement, Moody’s writes that Danish banks generally are operating in a difficult mac-roeconomic climate and they are heavily dependent on funding from the international money mar-kets. In addition, it is still Moody’s opinion that, in comparison with other Nordic and European countries, the Danish state is much less willing to support its banking sector.
Danske Bank takes note of Moody’s downgrades but does not understand Moody’s very negative view of the Danish banking sector.
“We have had a close dialogue with Moody’s in recent months,” says Henrik Ramlau-Hansen, Chief Financial Officer. “We are certain that Moody’s has heard our arguments, but we do not think they are reflected in the rating the Bank has received."
Danske Bank notes that Moody’s continues to take a very negative view of the level of systemic support in Denmark, among other things. As a systemically important financial institution (SIFI), however, Danske Bank will doubtless enjoy the same support in Denmark that the other SIFIs in the Nordic region will receive in their home countries.
This is a translation of a company announcement in the Danish language. In case of discrepancies, the Danish version prevails.
“There is broad political support for a well-functioning financial sector in Denmark, as evidenced by the various bank packages, among other things” continues Henrik Ramlau-Hansen. “Moreover, the government has appointed a committee that will designate the SIFIs and define the special rules and considerations that will apply to them. If Danske Bank is treated the same on that score as the other large Nordic banks, our rating will be two notches higher.”
Danske Bank is now moving in a positive direction and expects declining losses in the coming years. In addition, the Bank has launched several initiatives to reduce expenses and raise income that will improve earnings significantly and further strengthen the capital base.
The Bank has a strong liquidity base, and with a capital base of DKK 159 billion and a solvency need of DKK 91 billion, the Bank had a very comfortable capital buffer of DKK 68 billion at the end of Q1 2012.
Danske Bank A/S
Henrik Ramlau-Hansen, Chief Financial Officer, phone +45 45 14 06 66
Peter Rostrup-Nielsen, Chief Risk Officer, phone +45 45 14 07 60
Kenni Leth, Head of Press Relations, Phone +45 45 14 56 83 / +45 51 71 43 68
- 2 Nov 2012 Positive outlook for Danske Bank’s rating from Standard & Poor’s
- 31 Oct 2012 Articles of Association Danske Bank A/S
- 31 Oct 2012 Company Announcement No 20 October 31, 2012