Danish Bank Does A Northern Rock!
News that Roskilde Bank in Denmark has been saved from the jaws of collapse by a government led bailout has brought back disturbing memories of the Northern Rock debacle in the UK. While this is the second Danish bank which has required third party assistance the Roskilde Bank is actually one of the majors, being the 8th largest in the country, against a relatively small operator earlier this year. So what went wrong?
It appears that the Roskilde Bank was pushed towards collapse after a number of property based transactions 'went bad'. It required a concerted effort by 100 Danish financial companies and the authorities to raise the £483 million to allow the bank to continue trading - under government control. The government was also forced to take on substantial debt which was approaching the £4 billion level.
This latest episode in Denmark shows that it is not just the UK financial market which is under extreme pressure. Even though the authorities around Europe are giving out the correct signals to secure the banking network, this will not be the last major European bank to require government assistance. There are also rumours that the US situation is no better either!
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