Denmark's Nykredit says needs $2.3 bln more capital under new rules
COPENHAGEN, Sept 27
COPENHAGEN, Sept 27 (Reuters) - Nykredit can raise the extra 12 to 13 billion Danish crowns needed to meet new capital and liquidity requirements but if these are tightened further, Denmark's biggest lender may have to extend less credit, new CEO Michael Rasmussen said.
If business volumes stay unchanged, Nykredit expects total required equity to rise to about 70 billion Danish crowns from 58.6 billion at the end of the second quarter.
"With the knowledge we have today about upcoming regulation, we can see we need 12 to 13 billion Danish crowns ($2.17 to $2.35 billion)," Rasmussen told Reuters.
He took the helm on Sept. 1 at the unlisted financial group that controls 44 percent of the Danish mortgage market with total outstanding mortgage bonds of 2.59 trillion Danish crowns.
Nykredit has emerged from the latest economic downturn in a healthier shape than Danske Bank, which was hit hard by loan losses in its Irish and Northern Irish business.
Nykredit does not have shareholders, and instead is owned in a mutual partnership by its customers via the Nykredit Association. The special structure means raising capital from the stock market is not an option and that a listing on stock exchange is not a part of the plan.
"With current profit expectations for coming years we expect to achieve our capital requirements, but if they are tightened further we may be forced to shrink the balance sheet," Rasmussen said.
Lower lending from Denmark's biggest financial institution would be bad news for country's economy, he added, as companies and retail customers could put a break on activity.
While mortgage lending is a highly competitive market with low margins, Nykredit has in recent years increased its focus on regular banking activities and is expected to boost this line of business under Rasmussen, a 27-year veteran of Nordea, the Nordic region's top bank.
"We would like to see the bank be a relative bigger part of the group," Rasmussen said, adding that the banking part of the firm is still only the country's fourth largest.
($1 = 5.5326 Danish crowns) (Editing by David Evans)
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