* Standard & Poor's says Danish banking crisis not over
* Says up to 15 more Danish banks could default
* Says failures likely due to bad loans from boom years
COPENHAGEN, July 28 Rating agency Standard &
Poor's said on Thursday that Denmark's banking crisis is not
over and up to 15 more banks could default, due mainly to
boom-year loans made to the commercial property and farm
Eleven banks have failed in Denmark since the start of the
financial crisis in 2008, nine of them falling into the hands of
state administrators and two taken over by stronger entities.
"In our view, as many as 15 Danish banks could default,"
Standard & Poor's credit analyst Per Tornqvist said in a
Worries about Denmark's numerous small banks spread after
the failure of small local bank Fjordbank Mors last month.
Moody's said on July 12 that some of Denmark's roughly 100
banks were under stress but that the financial system could cope
with the failure of even several banks.
S&P said in a new report entitled "Further Bank Failures
Likely In Denmark" that more Danish banks were likely to go
under due to loans made to the commercial property and
agricultural sectors during 2005-2007.
"We think, however, that the likely cost to the country's
remaining banks through direct exposure and a system-wide
deposit insurance scheme is manageable within our current rating
expectations," S&P's Tornqvist said.
S&P said its base-case assumption was that gross losses due
to additional bank failures would reach 6 billion to 12 billion
Danish crowns ($1.16 billion - $2.31 billion) over a three-year
The rating agency said that although the banks that have
failed in Denmark so far have been small, "it is nevertheless an
unusually high number for a developed market where bank defaults
are generally rare events and extraordinary government support
mostly averts losses to senior creditors."
Denmark removed a general government guarantee to banks at
the end of September 2010, and the government has repeatedly
said it will shield taxpayers from the costs of bank failures by
making banks, their shareholders and creditors bear the burden.
Officials at the Danish Bankers Association, the main lobby
for the country's financial industry, could not be reached
immediately for comment.
(Reporting by John Acher; Additional reporting by Bangalore
Ratings Team; Editing by Will Waterman)
($1=5.189 Danish Crown)