Short Thesis: Danske Bank Update

Updated on

Luxor Capital kindly asked me to remove their analysis of Dan Dankse Bank, which I had posted last week. A reader from Denmark reached out to me further laying out the case for the short of Dan Danske, and gave me permission to publish parts anonymously. This does not contain any information from Luxor.

Both  the reader and I have no position in Dan Dankse. In fact, I dont own one Danish stock.

The irresponsible lending and growth has led them to undermine the traditional danish realestate bond. The real estate bond has actually in Denmark had the role of sovereign bonds as they have not in 200 years defaulted – not a penny.
But after Oct08 they first abused the national bank, that lended them cash at a very low interest to buy their own bonds. That stopped after some had persistently scolded the national bank (modesty prohibits me to mention whom).
Look a radical increase in National Bank lending on rather short terms 200-300 billion DKK 40-50 bio. USD. A year after (and after I had goaded a journalist to ask impertinent questions to Uncle Nils – as I affectionately call him – he responded that he had taken a “serious talk” – and made them stop).
If You look at the present interest rates:
You can see that the interbank lending rate on 3 month is over the 2 year sovereign bond – it is on par with the 5 year bond. It is not because there isn’t lots of liquidity (the green line on the second graph is deposits in the National Bank). But they do not want to lend it to Danske Bank – not even to next thursday.
This graph show the result on sovereign bonds from an oilexporting nation with consistent surplus on the balance of trade. The interest is dropping. Denmark is at present under massive pressure to revalu the DKK. The cash reserve of the National bank is about 100 bio. USD – and the official interest rates has dropped and dropped. Still nobody wants to buy danish real estate bonds! Danske Bank finance 1 year variable interest bonds from day to day.
The investors won’t touch the variable rate bond – both ATP and others have openly said that the oldfashioned 30 year fixed rate are all right, but the short term are trash. Danske Bank is – in my estimate – on the verge of collapse. That cannot be allowed to happen, as Danske Bank is 40% of the seriously inflated Danish financesector.
Behind Danske Bank stands Mærsk-line (shipping and oil) where the CEO Mærsk McKinney Møller (he IS 100 years old) has kept his stock, because his FATHER helped reconstruct Danske Bank in the 1920’ies. Mærsk is displeased. He has send one of his hachet-men as chairman of the board. Dispite this they have not been able to find a new CEO after three quarters! Internatal candidates are NOT on – and there seems to be a paucity of others.
Mr. Møller is seriously displeased.
The problem is: If Danske Bank crashes the danish economy is in the toilet. We will manage, as we have no foreign debt, but the housing market will suffer a total collapse.
I will refer You to this site – which unfortunately is in danish -http://www.ø
You are wellcome to run analisys by me – I have absolutely no interest in Danske Bank – the last 10 years I’ve not even had an account there – I have not use one of their ATM cash mashines the last five years!
By training I’m an economist and for the time being completely financial independent (though definately NOT a rich man).

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