Will ARMs de-stabilise the covered bond mortgage system?
Ed asked me to comment on hidden contingent sovereign liabilities of Danish mortgage bonds given the most recent Absolute Return Letter.
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Denmark
A Credible Solution to America’s Mortgage Crisis
The adoption of the Constitution of the Kingdom of Denmark Act in 1849 provided the first regulatory framework and Danish mortgage financing has ever since been tightly regulated, ensuring an entirely unblemished track record with not a…
The hidden contingent sovereign liability of Danish mortgage bonds
The road map for how a Danish government might be forced to issue government bonds and swap them for unsalable covered bonds in order to allow its financial institutions to abide by the Basel rules is an almost sinister way in which the…
Europe’s Political Climate Impacts the Debt Crisis Response
The policy response to the European debt crisis is critical and that response is function of European politics. There have been a number of developments in European politics that investors should be aware of.
Expect continued losses from Nordic bank exposure outside home market
Moody’s anticipates continued losses at Danske Bank, SEB, and Swedbank due to large exposure outside of the Nordic markets. In particular, exposure in the Baltics is likely to lead to continued writedowns for Nordic banking…
Zombie banks Scandinavian edition and the threat of too big to fail
Across the world, governments are doing their level best to shore up weak banking systems in the wake of the most significant final crisis in decades. Most market players appear to believe these efforts successful; why else have…
Event risk in the Baltics is critically high
This is the assessment of den Danske Bank as reported by Edward Hugh. The last time I mentioned the Baltics was on May 12th in my post “A bearish view on Eastern Europe.” I ended saying the Scandinavian banks’ exposure to the Baltics is…
Denmark: Fionia Bank collapses
Denmark's 11th largest bank, Fionia Bank, has collapsed after massive writedowns of 1.2 billion Danish kroner. However, the company will not face liquidation. According to Politiken, Instead of bankruptcy, Fionia's assets will be…
Citibank has cut all lending in Denmark
This comes from the Danish daily Berlingske Tidene. It suggests that Citibank is cutting back all international lending. Citigroup has sold its German operations to a French bank and I understand they are cutting credit lines in the UK as…
Foreign investors dump Danske Bank
It is not just Eastern Europe and Switzerland where problems are popping up. This from the Berlingske Tidene, a Danish daily: