* Vestjysk Bank sacks CEO with immediate effect
* Says to take additional 600 mln DKK impairment
* Sees 2012 impairment losses of 1.05 bln DKK
* Shares in bank hit all-time low
(Adds comments, details, background, share price)
By Mette Fraende
COPENHAGEN, Sept 25 Denmark's Vestjysk Bank
sacked its chief executive on Tuesday after it had to
write down a further 600 million Danish crowns ($103.93 million)
to cover risky property and farm loans.
Shares in the bank fell as much as 61.3 percent to an
all-time low of 7.50 crowns before recovering partly to trade
down 33 percent at 13.0 crowns by 1034 GMT, putting the bank's
market capitalisation at about 797 million crowns.
Danish banks have been stung by bad debts from a burst
property bubble and rising writedowns on loans to struggling
farmers. Bank profits have taken a further beating after
regulators tightened writedown rules in April.
Vestjysk, the country's ninth biggest bank and controlled by
the government, has taken about 3.0 billion crowns of writedowns
since 2008. It said a review of its loan portfolio, requested by
its board as the economy continued to weaken, led to the further
"As a result of the above (the review), and because the bank
in recent years has suffered significant impairment losses ...
the bank's supervisory board has lost confidence in the bank's
chief executive, Frank Kristensen," it said in the statement.
Kristensen, together with the bank's head of credit,
Flemming Nielsen, has resigned with immediate effect, and
Kristensen will be replaced by Vagn Thorsager, the bank said.
The Copenhagen bourse's banking index was down
0.9 percent as investors feared that the country's fragmented
banking sector, with more than 100 banks, could see more small
and medium-sized institutions taking extraordinary loan losses.
Vestjysk Bank said it expected total bad debts for 2012 to
reach 1.05 billion crowns, and it would take a further
extraordinary impairment of goodwill of 208 million. It said it
expected a full-year 2012 pretax loss of between 750 million and
800 million crowns, against a loss of 559 million in 2011.
The Danish state holds 55.39 percent of the bank's stock
after the bank converted state loans into shares.
"Their equity capital stood at 2.5 billion crowns at the end
of the first six months of the year, so of course 600 million
(of additional bad debt) is significant," Alm. Brand analyst
Stig Nymann said.
Upcoming stricter capital requirements under international
Basel III rules are expected to drive more mergers and
acquisitions between financial institutions.
A number of industry insiders, including the chief
executive of Denmark's second-biggest lender, Jyske Bank
, have forecast the number of small and medium-sized
banks in Denmark could halve over the next three years.
Last week, Spar Nord Bank said it would buy
smaller rival Sparbank, lifting expectations for more
consolidation as the financial crisis bites and regulations
toughen. That deal was the second involving
small Danish banks in a week.
"It is possible that we will see more small banks having to
take extraordinary writedowns, but not the big banks," SEB
Enskilda analyst Claus Therp said.
($1 = 5.7732 Danish crowns)
(Additional reporting by Kristian Mortensen; Editing by Pravin