Tønder Bank’s bankruptcy leads to sector-wide scrutiny

Board of directors resigns as scandal-ridden southern Jutland bank collapses

Finger-licking good (The Donut Shop Facebook page)
November 5th, 2012 5:44 pm| by admin
facebooktwittergoogle_pluspinterestmail

The Danish bank Sydbank has agreed to take over all activities of local rival Tønder Bank.

The deal came after Finanstilsynet (FSA), the financial supervisory administration, said last Friday that Tønder Bank didn't have enough capital to continue as an independent company.

Under the agreement, Sydbank will take over around 18,000 customers and a balance sheet of roughly 2.3 billion kroner.

Over the past few weeks, regulators inspected Tønder Bank's books and found that they were short 300 million kroner. FSA inspectors said the bank drastically over-estimated the value of securities, agriculture, real estate and other investments it had made on behalf of its customers. The inspectors accused the bank of a lack of oversight and said that it underreported the number of bad loans it had on its books.

Although representatives from the bank said they did not agree with the regulators' assessment of its worth, the bank could not raise the missing funds in time to remain independent.

The scandal has caused the bank's independent auditor, BDO, to come under scrutiny. BDO had assessed the bank as being sound. BDO head Henrik Brüning would not comment specifically on the case, but said that the company takes its reputation seriously.

“We are always aware when someone criticises our work, but first we have to determine if the criticism is genuine,” he told DR News.

BDO has about ten other banks as customers. Brüning said that the problems at Tønder Bank should not lead to his other customers being scrutinised.

“Our work is in order,” he said.

The Ministry of Business and Growth said in a statement that no unsecured creditors would suffer losses, but is unclear how, or if, the missing capital would be recovered.

Depositors are insured up to a maximum of 750,000 kroner, but many Tønder Bank customers with less than that amount lost the entire amount of their deposit after buying uninsured certificates of deposit. 

Some of those customers are now putting together a lawsuit against Tønder Bank for failing to provide adequate financial consulting.

Finger-licking good (The Donut Shop Facebook page)
Don’t miss out on this one, yer donut!
Think of round, fried, sweet, glazed, mouthwatering donuts ... and now imag...
The award ceremony took place at PWC's offices in Hellerup (photo: Pwc.dk)
TDC wins accounts prize: Disappointing year but well reported
It may have been a difficult year for TDC, marked by a price war with compe...
Share price has been rising steadily since January (photo: iStock)
Novo Nordisk to join elite Stoxx Europe 50 index
The medicinal giant Novo Nordisk will soon take its place on the prestigiou...
The historic institute was founded in 1921 (photo: Soerfm)
Man jailed for setting fire to Niels Bohr Institute
A man has been jailed for setting fire to the historic Niels Bohr Institute...
Chilean wines are up-and-coming (photo: iStock)
Chilly and arid: a vast mosaic of terroirs and soil types
Vino at the Chateau Carsten Pedersen, nemlig.com An up-and-coming favo...
Wonder if the overpriced food will go digital as well (photo: B Lund)
Lego goes digital … again
Fans of digital block-building games everywhere can once again build their ...