Denmark’s regional banks have created a new technique to boost liquidity and escape an international funding wall, and that is to make cuts on their lending and assets. This would help them to generate the much needed cash.
Underestimating his position, Lasse Nyby, the Chief Executive Officer at Spar Nord Bank said it is difficult for them to get money on an international level and therefore, he is in look out for buyers who could offload its leasing business. By this, the fourth-largest listed lender would be able to generate about 7 billion kroner ($1.35 billion), which be helpful in repaying the state-backed bonds in 2013.
The Denmark bank industry is still in the shock of failure of two regional banks this year, but the government has pull up its socks and is working on measures to allow lenders to sidestep the bill.
The failure of the two banks have led to the European Union's toughest resolution laws and resulted in senior creditor losses, which according to Nyby is extremely harmful. He stated, "It's been harmful to the industry to have laws at home that are extremely different from those outside the country's borders, further explaining the condition in the country, he said, "It's meant that bondholders and depositors have lost money. That's hurt confidence in Denmark's banking system when we've sought funding outside the country. In hindsight, it's absolutely not been beneficial”.