Big news out of Denmark!
The newspaper Berlingske has the following information:
The Danish CB announced Thursday June 21st 2012 the issue of between 75 and 100 bio. DKK (10-15 bio. EUR) in sovereign bonds.
Deposits in the Danish Central Bank have grown over the last year from about 90 bio. DKK to just shy of 220 bio. DKK. At the same time the sovereign bond interest rate has dropped so the 2 year bond is in negative territory and the 10 year “yields” 1 ¼%. Besides pointing to a decided scarcity of sovereign bonds – despite a net issue of around 50 bio. DKK in the last year.
One thing is the crisis in Greece and Spain has something to do with it on one level or another, there is the problem with the decided lack of investor confidence in the variable rate mortgage bond. The Central bank has for years made their concern over the highly volatile and dubious flexible interest bonds clear. Apparently it has been decided to keep a very close watch on them.
Now it is always advisable to look both ways before you cross the street, so maybe it should be noted that there has been a major tax-reform underway for some time. Negotiations between the government and the largest opposition party (the liberal Venstre) have been on and off – mainly off. Last weekend the leader of Venstre felt he didn’t receive enough attention to his grievances and travelled to the UN treehugging convention in Rio – with the prime minister.
The impression gained in the public has been that it is a lovers tiff – both parties have gone out of their way
to publicly state that they were still on speaking terms. The past week the negotiation have dragged on with extreme parties on both wing under the management of the finance minister as the prime ministers minion. Clearly a play for time.
It has hardly escaped notice that the Spanish banks need urgent action and the four major Euro-zone countries have been sticking their heads together. Merkel has had two meetings with President Obama this week at the G-20 meeting. Apparently Obama told Merkel to get a move on. So the key figures in the EU have a busy week ahead of them.
The position of Danske Bank becomes still more untenable. They received a liquidity injection 3 months ago – and that seems to have evaporated – or rather sunk into deposits in the CB.
Now neither the PM, the CEO of DCB, CEO of ECB nor any other alphabet-soup addict have drawn me into confidence (much less asked advice), so for the time being it remains speculation with no more foundation than the stated facts.
To me it seems like the way I would nationalise Danske Bank.
1) Be away on a politically romantic conference while the plumbers redecorated the flat.
2) Getting home be in session all day while the journalists asked exploratory questions to unimportant politicians.
3) Send in the SWAT-teams Friday at dusk in Danske Bank and BRF (probably of necessity). Eliminate “equity” and ad new capital already floated on the market.
4) The CEO of CB converting the deposits to sovereign bonds – some them even with an interest.
5) Spend the weekend putting details and people in their place and on Monday opening up Danske Bank under new owners.
6) Phone Schäuble and tell him that Danske Bank has – as promised – been kept out of his ever thinning hair.
But that is just me – and who cares what I think.