Wednesday 18 October 2017

Danske Bank accepts it may have long wait to sell €4.7bn of non-core assets

Donal O'Donovan

Donal O'Donovan

THE Danish owner of National Irish Bank (NIB) has admitted that it may be "some time" before it receives an offer for around €4.7bn of "non-core" assets it is looking to sell.

NIB's parent, Danske Bank, has launched an effort to raise €940m in fresh investment. This is aimed in part at improving its credit rating in an effort to lower its borrowing costs.

Shares in the Copenhagen-listed bank fell sharply yesterday after it announced its financial results.

In Ireland, the bank expects to be hit with further significant losses over the next six months, after being forced to write off nearly €600m on property loans when it announced results for the first nine months of 2012.

NIB said its Irish unit suffered operating losses of €8m in the first nine months.

The bank set aside €578m to cover losses on property loans over the same period. The Irish loan impairments made up almost half of the €1.3bn of impairments suffered across the entire Danske Bank.

The latest operating losses mean a negative swing of €40m, compared to the operating profits of €32m in the same nine-month period last year.

Impairments

Profits in the Irish market were squeezed due to rising costs associated with a reorganisation of the business here.

The amount of cash set aside to cope with loan-impairment charges, however, represents an improvement of 9pc compared to last year.

Managers in Denmark said they anticipated further write-downs on loans to Irish developers over the coming quarters.

The bank said the performance of its €3.2bn of Irish mortgages "remained satisfactory".

Customer deposits stand at €3bn, broadly unchanged since the previous reporting period.

The non-core Irish assets were separated from the rest of NIB earlier this year, under a radical restructuring plan that included closing 27 bank branches and replacing them with nine customer centres.

Danske Bank's chief executive Eivind Kolding said Irish loan losses would remain "high" over the next two quarters, but should then begin to "normalise".

He said losses on mortgages here were lower than those suffered by the bank's peers.

The bank is predicting DKK7bn (€940m) of total losses on Irish loans as a result of the crash. Only DKK3bn (€400m) of losses have been booked so far, he said.

Danske Bank unveiled plans to cut 3,000 jobs across the bank and to sell DKK7bn (€940m) in shares as Denmark's largest lender looks for ways to increase its capital buffers.

The measures were announced together with Danske's third-quarter report, which showed that Denmark's biggest bank swung back into profit in the first nine months of the year.

Irish Independent

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