From my Danish friend who is highly knowledgable about Danske bank. Both him and myself, have no position in the company. Commentary has been edited to protect the innocent. The story is already huge news in Denmark, and has been reported by the country’s biggest newspapers.
The authorities not only shut their eyes firmly – they wear VERY dark glasses as well.
Danske Bank has gotten themselves som rather powerful enemies:
i) The management of the National Bank is thoroughly pissed off. He is an electrician by trade and craft originally – so he also has a vocabulary found in more – shall we say – “agricultural” circles. And people cross him at their peril.
ii) The ATP pension fund is game at breaking their balls – if they have gotten their money out of the way in time – and they have. The chairman, Lars Rohde (an absolute MUST KNOW in Danish financial circles) publicly humiliated the real estate financing companies on prime time. And can he deliver a tongue lashing? Believe me – he can – but he fights reasonably clean – with brass knuckles.
iii) What You have overlooked – and maybe did not know: In Oct 2008 the danish prime minister, Anders Fogh Rasmussen, had to get in touch with President Bush for an emergency USD credit of 5 bio. USD. At a time when all Hell had broken loose. Not only that; but Denmark had to approach the EU for a similar facility. The reason was that Danske Bank was prominent on the list of european banks that would be in trouble due to Lehmann Brothers – or more specifically the insurers of all sorts of swaps.
You don’t make friends at high places acting like that.
What is the interest in this for Luxor? Well, it is an opportunity to show that the company stands up for their investors – especially if they have no position concerning Danske Bank. I would not be to concerned about Mærsk shares, as he is very displeased with Danske Bank:
1) A smallish issue of bonds was handled by Nordea – the number two bank in Denmark. Nordea is actually part owned by the swedish state – and mr. Møller is “known” to dislike Sweden. A factor when no money is involved. To use Nordea is a slap in the face to Danske Bank.
2) Mærsk negotiates financing with governments! He has 20 Tripple-E on order on DaeWoo. Financing by the curtesy of the Korean government – if I’m not wrong.
Once in a ship deal the seller wanted a bank guarantee for the money. Mr. Møller replied: “Fine – please inform us which bank You wish Mærsk Line to guarante?”
He doesn’t care two hoots for his shareholder – they get their profit from the raising stock. Any stockholder discontent is met with an offer to buy their shares – on the spot!
3) Generally Mærsk has shown a disinclination towards throwing good money after bad. He was pressured to do so last year – and the CEO of Danske Bank has since lolled around with a wringed neck since – and a very humble demenour – quite uncharacteristically.
In the final analisys Mr. Møller is a Danish patriot – it sounds corny and sentimental; but it is never the less true. He hardly pays taxes – not because he does not want to contribute; but because he thinks he can handle money better than the government – and he is generally right.
He build the new opera in Copenhagen – not only did he pay for it – cash; but he was personally involved in the project (reducing the architect to hysteria) and it came out on budget. The opera actually resembles a containership, where the stages are shuffled around like containers.
He was cruel to the internal squabbles of the artists. He briefly stated: “The Shipping Company will NOT build an opera without balley facilities!” So there are facilities for the Royal Balley. He doesn’t pinch pennies; but he gets his will – on budget!
Your original analisys is correct – in my view. The threat is that Danske Bank will bring down the Danish State, as debt in Denmark is predominantly private – and in the housing market. But before that happens Danske Bank will be nationalised. The money is there and it was VERY close in 2008. If it comes to that it will be without compensation to the shareholders.
Danske Bank is scared out of their pants – which is probably the reason Your articles has caused concern – ney babbling panic. You are hitting some very sore extremities. If I’m not wrong: The stock price is kept up by lending to minor “investors” – taking own stock as colatteral. If share prices drop the bank will have to close these accounts and stand with holdings of own shares – shares that cannot be sold. The critical rate is probably about the present 75.
As to Cevian Capitsl (which just bought a 5% stake and Danske and which Carl Icahn is invested in)? Well I don’t – nothing that will stand up in court – and the authorities would not be interested.
My guess – and it is an educated guess.
When PFA and ATP are dumping their shares, there is only one thing keeping them from falling through the floor: Buy them yourself. Now that gets ugly around the quarterly report, as these stock do not count. So what do you do? Well you approach a swede, sell the stock to him, loan him the money and promise to buy back the stock at an agreed price – no need to make all that fuss in the bookkeeping – only compliucates matters. The stock itself is trash.
The interesting part is to see Mærsk shareholding: It should be excatly 20% – the limit that will keep Danske Bank as an associated company (for tax purposes) – last time i looked it was 22%. By the way: There is no way You will ever find a consolidated Mærsk balance sheet – ever!
Mr. Møller never carries any personal ID – not even a business card. He IS royalty. Travel expenses in his company are reimbursed with your signature and nothing more – if anybody did get the insane idea of fiddling: He would take the loss and the swindler would never – ever – get a job again – nowhere.
One thing about the opera house: It is placed on the former shipyard Burmeister & Wain – where he for more than 50 years had viewed the plot from his office. He hated B&W – never had a ship build there. The city of Copenhagen got an enviromental problem into a Tjernobyl sarcofagus, Mr. Møller made shure, that there would never be a shipyard there again. The problem was that next to B&W was the naval yard – which gave the Navy a problem: So he build the new class of frigates on his yard – postponed the closure. It is probably the first time a military project was on time and on budget – from a shipyard that was to be closed (the last ship of a yard is normally delayed, as nobody has any motive to meet delivery schedule).
Why is Mærsk a shareholder in Danske Bank? Well – his father reconstructed the bank in the 1930’ies and he has kept the stock – at original book value untill about 1980. To him that bank is a national obligation – again it sounds sentimental – it isn’t. And he has no sense of humour.