Nordea Could Lose Danish Banking License over CIBOR Scandal

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Nordea Could Lose Danish Banking License over CIBOR Scandal
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Nordea Could Lose Danish Banking License over CIBOR Scandal

 

Barclays PLC (NYSE:BCS) (LON:BCS) leave the CIBOR panel.

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Reuters has:

According to the Danish Bankers Association today Thursday August 2nd 2012

The Danish Bankers Association now only has 7 banks left in the panel – and two foreign: Deutsche Bank AG (ETR:DBK) (NYSE:DB) and Nordea – and with the pressure Deutsche Bank AG (ETR:DBK) (NYSE:DB) is under it might be a matter of time before they will announce their time is occupied elsewhere!

The Danish Bankers Association has:

That means: Apart from Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY), there is only pathetic jokers left.

This raises the question what will happen to all the thousands of loan agreements where the interest rate is fixed by the CIBOR – among those some of the real estate mortgage bonds.

It has little credibility that Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) can continue to do as they please – especially in the light of the Central Bank instituting the CITA interest rate. An interest rate fixing that has been underway for about a year.

If the CIBOR just ceases to exist there will be a lot of loan agreements that must be considered null and void. In practice, CIBOR might very well continue as a simple rebranding of the CITA – just to avoid a legal mess.

The interesting question is how long Nordea can retain a Danish bank licence: Being part owned by the Swedish state the ability to influence something as vital as Central Bank interest rates might be considered as being in very poor taste – especially as very little trade is liable to be conducted in CIBOR.

It seems to be a trend that non-Euro banks are being told to leave the zone. Sydbank has dismantled their Swiss subsidiary f.i.

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