Roskilde to Be Bought by Central Bank, Group as No Buyers Found

Roskilde to Be Bought by Central Bank, Group as No Buyers Found


Aug. 25 (Bloomberg) -- Roskilde Bank A/S will be bought by the Danish Central Bank and a group of the country's financial companies after no buyers were found for the regional operator, which last month became the first bank in the country to be bailed out for 15 years.

The central bank and the group will inject 4.5 billion kroner ($890 million) into Roskilde after no single private bank, domestic or foreign, was willing to buy it, the Copenhagen-based lender of last resort said late yesterday in an e-mailed statement.

The bank has additional writedowns of at least 1 billion kroner, a new external revision showed, according to a separate statement from Roskilde yesterday. That is more than double the writedowns it had already declared.

Roskilde, based in the city of the same name, received on July 10 ``unlimited liquidity'' from the central bank and the Danish Bankers Association agreed to cover as much as 750 million kroner of losses after Roskilde made bad loans to home builders. The central bank said then the backing was conditional on the bank finding a buyer within six months; yesterday, it said Roskilde will continue to operate under its own brand.

``The government backs the solution found for Roskilde Bank,'' Bendt Bendtsen, economy minister, said in a statement on the ministry's Web site. ``We had preferred that a private buyer had been found, but in the current serious situation, this solution is necessary.''

Solvency Requirements

Roskilde Bank no longer meets requirements for solvency, it said yesterday. The bank had said July 14 it would write down as much as 900 million kroner for the first six months of the year. Since the July announcement, ``a large number of clients'' have pulled their assets out of the bank, it said yesterday.

The bank's stock has dropped 43 percent since the July 10 announcement of the bailout and lost nine-tenths of its value since its April 2007 peak. The shares closed down 8.4 percent at 81.5 kroner on Aug. 22, giving the bank a market capitalization of 1.02 billion kroner.

The purchase sum, including debt, will be 37.3 billion kroner, Roskilde said. The buyers will ``take over all debt and other obligations except for the hybrid core capital,'' the central bank said.

Roskilde asked the Copenhagen OMX Stock Exchange to suspend the trading of its shares and the Oslo ABM and Irish Stock Exchange to suspend the trading of its issued bonds.

It was not immediately clear which lenders were part of the group acting with the central bank, nor the proportion of funding being supplied by the bank and the financial companies.

BLOOMBERG