Nordea to Sell Danish Life Unit: The Real Reasons

Nordea to Sell Danish Life Unit: The Real Reasons
See page for author [Public domain], via Wikimedia Commons
Nordea to Sell Danish Life Unit: The Real ReasonsNordea Bank AB (STO:NDA-SEK) sets insurance company up for sale in Denmark.

Berlingske has:

But more to the point for the broader perspective:

Where quotes Berlingske:

Investing in the Next Generation of Emerging and Frontier Markets with Maurits Pot

Yarra Square Investing Greenhaven Road CapitalValueWalk's Raul Panganiban with Maurits Pot, Founder and CEO of Dawn Global. Before this he was Partner at Kingsway Capital, a frontier market specialist with over 2 billion AUM. In the interview, we discuss his approach to investing and why investors should look into frontier and emerging markets. Q2 2021 hedge fund letters, conferences and Read More

”Berlingske writes Saturday.

According to the paper it should only be the Danish part of Nordea Bank AB (STO:NDA-SEK) Life that is up for sale, and not Nordea Life’s other Nordic companies.”

Now why is this titbit of gossip that Nordea Bank AB (STO:NDA-SEK) declines to comment on interesting beyond the parish?

Well to a devious and suspicious mind as mine, it is an indicator that my musings about the European Union’s policy towards the financial sector. Is it a conspiracy against the banks? You bet your sweet life it is! We are talking about sovereign nations ganging up on the financial sector to avoid their several economies being dragged down by the banks – some the economies are in enough trouble as it is. Tact prohibits me from mentioning Spain among others.

I first had a vague inkling of the perspective one or two years ago, as I wondered on the strange behaviour of Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) in Ireland – particularly the National Irish Bank subsidiary.

The way Ireland has continually hounded the annual and quarterly reports of Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) with still larger impairments is astonishing – compared to the cavalier attitude towards the pitiful state of the Danish loan book. This is far from the only sign. Sydbank dissolved its Swiss office and Jyske Bank got the losses from the Greek debacle full face and from both barrels.

Incidentally Jyske Bank has settled claims of wrongful conduct towards investors out of court and paid above 80% on 150 mio. USD damage claims – probably wise and comparatively cheap considering it is a civil suit – with that settlement it is apparently marginal if a criminal prosecution could lift the burden of proving fraud (or whatever) beyond reasonable doubt.

These musings led me to the hypothesis that the EU wants a general disentanglement of “foreign” banks out of the Euro-zone. But the Germans-Swiss agreement to counter Swiss banks helping and abetting tax evasion. That has as such nothing to do with the EUR, but every connection with banks jumping out of reach of the sovereign nations.

Now also today Berlingske has a story about the bank inspections report on Danske Bank – a report that hasn’t been published on the Bank Inspections homepage as of yet.

Discounting the scandal gossip about not-so-objective loans to management and papers apparently gone AWOL from the files – very difficult to prosecute, when documents and notes have passed the shredder – some time ago, there is one clear demand (the paper has almost certainly been leaked):

”The banks rating of the costumers in the Swedish branch must be correct.”

Meaning: It isn’t at the present time! Now Swedish banks are notorious for not taking losses – even in a business founded on romantic fantasies. So why the rap over the fingers? To me it seems like a preparatory move for a reasonable expulsion out of Sweden following the practice in Ireland where generous impairments precedes sale (with a guarantee for the rest, should generosity have been impaired and not the loan) to other banks. Judging from the Irish nightmare the costs are likely to be considerable before Danske Bank is allowed to slither back over the bridge.

What has that got to do with Nordea? Everything!

When a Danish bank in Sweden is told to move out – which is fair enough – as Danske Bank has considerable state loans and guarantees, not to mention talking about bringing short term debt in the CB and ECB up to around 10 bio. EUR. In this context the “missing” paperwork is serious as there must be collateral for these CB loans of prime quality. Well sovereign bonds are probably long since sold off, the real estate mortgage bonds are own issues and thus don’t count – that leaves “good” loans added to the asset list that the CB will pawn last year. It is a bit difficult to claim debt quality when all in the folder is postcard greetings from the Brazilian jungle port of Manaus.

When Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) is to move out of Sweden there is all the more reason for Nordea to move out of Denmark, as Nordea is 20% Swedish state owned – if memory serves me.

So why now and why the insurance division?

Well as an investor an insurance company likes – in principle – real estate mortgage bonds. Now Nordea Bank AB (STO:NDA-SEK) is also a real estate mortgage bank with a market share of (again if memory serves) 15%. These bonds are not likely to be of significantly better quality (or yield for that matter) than the other real estate mortgage bonds. How much junk the insurance costumers have been forced to swallow is pure conjecture, so is speculation on how much has been palmed off to the Swedish “Mom” – leaving a potential currency instability risk.

What is NOT figment of imagination is the CB CEO’s clear statement on the Mortgage Banks Annual meeting:

Where he clearly stated without mentioning names that real estate mortgage is “systemic important”. In plain English: Anybody messing with the Danish real estate mortgages is liable to be hurt very badly.

A Swedish bank issuing Danish real estate bonds and buying them themselves – that comes close to manipulating just about everything in so many ways! A true Sodom and Gomorrah of banking – and we know what happened to those that looked back.

Now Denmark is a tin pot nation tinkering (rather ineptly) with global banking and could have been left in the shallow backwater of the Baltic Sea together with other Nordea Bank AB (STO:NDA-SEK) degenerates, so it is a signal to all investors and banks, that the European Union is as serious as can be that they will not only bring their economy in order, but also abolish banking as we know it.

What is significant is: This has nothing whatsoever with the EUR – the countries affected are Euro-zone and non Euro-zone!

No posts to display