Company Announcement 20 - 2008
The OMX Copenhagen Stock Exchange
Forstædernes Bank joins the Danish government guarantee
The Board of Directors still recommends unanimously that shareholders accept
Nykredit's tender offer.
The guarantee scheme
The Danish government has established a guarantee scheme providing a two-year
guarantee for all deposits and unsecured claims in Danish financial
institutions. Following agreement with the financial institution sector the
scheme is to be managed and financed by the Danish banking sector's contingency
association “Det Private Beredskab”.
Forstædernes Bank is confirming its membership of Det Private Beredskab, which
means that the Bank is contributing to and is covered by the new government
guarantee that runs from 6 October 2008 and two years hence.
Forstædernes Bank's share of the annual guarantee commission of DKK 7.5bn is
expected to amount to DKK 110m to 120m. To this should be added a share of the
total guarantee line plus any increased guarantee commission of DKK 290m to
320m out of a total of up to DKK 20bn according to the terms of the agreement.
In 2008 the Bank's participation in the guarantee scheme is expected to affect
the Bank's pre-tax results adversely by DKK 25m to 30m.
The Board still recommends shareholders to accept Nykredit's tender offer
The Board of Directors of Forstædernes Bank has assessed the contents of the
government's guarantee scheme recently adopted, and the Board concludes that
the Danish government guarantee does not occasion any change to its unanimous
recommendation to accept the tender offer made by Nykredit.
As a consequence of the government guarantee Forstædernes Bank is expected to
have easier access to short term liquidity in the coming period. However, the
issue of the Bank's long-term funding will not be solved by the government
guarantee. The Board cannot recommend that the Bank's activities be based on
short-term funding.
The government guarantee does not increase the Bank's access to the incurrence
of subordinate debt.
Likewise, the Bank's other challenges will remain unchanged. Regardless of the
government guarantee, the Bank will still risk substantial impairment losses
and have the prospect of a lower earnings potential, including aggregate zero
results for 2009 and 2010.
Thus the Board still finds that the analysis underlying the endeavour to
involve Nykredit in a solution is still valid and that Nykredit's purchase of
the bank is the most attractive and responsible solution in the long term for
the shareholders as well as the company.
The Executive Board
-----------------------------------------------------------------------------
Contact person:
Steffen Torvits, Investor Relations and Press Manager, tel. +45 22 22 20 36
This announcement has been issued both in Danish and English. In case of any
discrepancies, the Danish version shall prevail.
