Denmark

Max Bank Saved By State Bailout

Max Bank almost became the tenth bank in Denmark to declare bankruptcy since the economic collapse in 2008. However, the bank was saved by a buyout deal with the state’s support. Unfortunately for those who had invested in Max Bank, their investments are no longer valuable. Sparekassen Sælland, based in Holland was able to buy out the healthy portfolios held by Max bank while the remaining insolvent portions are left for the Financial Stability Company to deal with. As of 2010, Max Bank had 23,000 shareholders and registered a net loss of 60.3 million kroner in the first six months of this year. It’s speculated that the cause of this collapse was from the bank handing out too many large loans that it couldn’t pay off.

While Max Bank was able to avoid bankruptcy, in the name, it would still be difficult to instill confidence in foreign investors in regards to Danish banks. Like the economic crisis in the United States, Denmark is creating more problems by bailing out a bank in the hopes of scathing by without an additional bankruptcy. Had Denmark allowed these companies to go bankrupt, the economy would suffer, but would eventually balance out. This move helps to create more bubble threats and future net losses of greater proportions. The Danish must learn to realize that a credit problem cannot be solved with more credit (more debt). Denmark’s banks are obviously unable to afford large loans, so why bail them out with another loan?

Realist

http://www.cphpost.dk/business/business/119-business/52299-max-bank-goes-bust-but-acquisition-deal-breaks-fall.html

http://europe.chinadaily.com.cn/europe/2011-10/09/content_13860349.htm

October 10, 2011 at 13:49 pm