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Vestjysk Drops as State Stake Exceeds 50%: Copenhagen Mover

Vestjysk Bank A/S, the lender which is converting a government hybrid into shares, fell to the lowest price in three weeks in Copenhagen trading after the state received a higher stake than Nordea Bank AB had estimated.

Vestjysk fell as much as 8.3 percent to 21 kroner, the lowest since Jan. 27. The stock traded at that price at 9:51 a.m. in the Danish capital. The Lemvig, Denmark-based lender lost 73 percent of its market value last year, when it was told by the Danish regulator to double writedowns on bad loans.

Vestjysk bank said late yesterday the government and the state’s bank resolution unit will take a combined 55.4 percent stake after independent auditors valued the lender’s share price at 20.9 kroner for the conversion of the 297 million-krone ($51.9 million) of hybrid securities. Simon Christensen, an analyst Nordea, said today the auditors’ price was lower than he had expected and that he will cut his 12-month price estimate by 25 percent to 18 kroner.

“A higher price would, of course, have reduced the ownership stake of the state and, depending on which date or period chosen, that stake could have been below a majority,” Copenhagen-based Christensen said today in a note to clients, repeating his “sell” recommendation on Vestjysk.

Vestjysk said Jan. 25 it will merge with Aarhus Lokalbank A/S, allowing the two to extend state guarantees on their debt.

Danish banks, which have to refinance a total of about $30 billion in state-guaranteed debt through 2013, faced a funding squeeze after two failures last year led to senior creditor losses. Denmark this month amended its consolidation law to broaden access to state subsidies in the event of mergers.

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