Denmark bails out Roskilde Bank

Roskilde Bank, whose shares performed the worst last year among the Nordic region's 86 financial companies, became the first Danish lender to be bailed out by the central bank since the subprime crisis started.

The bank found that write-downs had to be made on a "significantly larger scale'' than it had expected, Roskilde Bank, based in the Danish city of the same name, said.

It will receive "adequate'' liquidity after the central bank discussed the matter with regulators and the Danish government, the central bank said.

Roskilde Bank is now mulling a sale of its assets and would be the second Danish lender to be acquired amid the turmoil on financial markets in the wake of the US subprime crisis.

Sydbank, the third-largest Danish lender, this year acquired BankTrelleborg, which said it had "significant financial problems.''

Roskilde's trouble stems from its real-estate lending, it said.

"The recent turmoil in the global financial markets and, not least, the crisis in the Danish real-estate market have led to a severe development in a number of larger client relationships,'' Roskilde Bank said.

Danish house prices will drop as much as 10% both this year and next because of rising borrowing costs and excess supply, Svenska Handelsbanken's Danish chief economist Jes Asmussen said on July 1.

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