Nordea Opens Door to Danish Bank Purchases in Consolidation Wave

Nordea Bank AB (NDA) said it’s ready to consider acquisitions in Denmark, where a burst real estate bubble and banking crisis have made a number of community lenders more affordable.

“I am definitely not ruling it out,” Anders Jensen, chief executive officer of Nordea Bank Danmark A/S, said yesterday in an interview in Copenhagen. “We believe we can grow our business organically, but if somebody stops by and asks for a cup of coffee, of course we are always willing to discuss.”

Denmark has emerged as Scandinavia’s weakest economy after a 2008 property crash left many households struggling to service their debts. Danes owe their creditors 321 percent of disposable incomes, a world record, according to the Organization for Economic Cooperation and Development.

Stockholm-based Nordea, Scandinavia’s biggest bank, unveiled fourth-quarter net income yesterday that dropped 8 percent, missing analyst estimates. Retail lending in Denmark didn’t grow in the three months through December as the nation’s recovery remains “fragile,” Nordea said. In Sweden, Norway and Finland, retail lending grew 2 percent in local currencies, the bank said.

Sixty-two banks have closed or been taken over in Denmark since 2008, according to a September government-commissioned report. The Business Ministry has urged the industry to consolidate in an effort to avoid insolvencies that risk triggering the nation’s bail-in legislation.

Housing Crisis

Even after being dragged through a housing crisis, Denmark’s financial industry employs more people than the rest of the Nordic region, according to an annual survey by the Employers’ Association for the Financial Sector. There are 34 percent more people employed in the bank industry in Denmark than in neighboring Sweden, the largest Nordic economy.

“If you compare the Danish banking industry to the banking industries in other countries, there is certainly room for consolidation,” Jensen said.

To match their record debt burdens, Danish households are amassing savings, reducing their demand for credit and hampering bank efforts to turn a profit.

Bank deposits have climbed to around 829 billion kroner ($152 billion), or 148,000 kroner per Dane, according to Johan Juul-Jensen, an economist at Nykredit Realkredit A/S, the country’s biggest mortgage lender. Rather than buy Christmas presents, consumers placed 10 billion kroner in high interest-rate accounts in December, he said in a Jan. 29 note.

“The cash flow is there for the consumers, but we do see consumers being very, very hesitant,” Jensen said. “They are uncertain when it comes to the general outlook for the economy.”

Bank earnings are under pressure from low rates and weak credit demand, the Danish central bank said in a December review of the financial industry. Smaller banks in particular should consider mergers “to obtain synergy effects and provide a basis for a more profitable business,” the bank said.

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editors responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net; Christian Wienberg at cwienberg@bloomberg.net

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