Government wants compensation from bosses behind bank failures
The state's financial oversight authority, Finansiel Stabilitet, has unveiled details of its planned legal action against 50 former directors, credit managers and auditors of six banks that failed during the financial crisis. The government is demanding that those charged with mismanagement pay back nearly three billion kroner to the state.
“We believe we can win these cases,” Henrik Bjerre-Nielsen from Finansiel Stabilitet told DR News. “It is important to prevent these kinds of things from happening in the future.”
The list of banks under fire includes both the Danish and the Faroese branches of Eik Bank, Capinordic, Roskilde Bank, Løkken Sparekasse and EBH Bank.
The list is expected to grow within a few weeks when charges are levied against top officials in Amagerbanken.
The first case will hit the courts in autumn when three former top officials of Capinordic, which went bankrupt in the fall of 2010, will be summoned to answer the state’s charges.
During the trials, the state’s lawyers will accuse the bank’s managers of actions – or lack thereof – that directly contributed to billions of kroner disappearing from the bank's coffers from one day to the next.
Lawyers for Finansiel Stabilitet said that the crimes committed by the bankers are relatively consistent throughout the cases. Among them are excessive and risky lending to property speculators, shoddy work when granting multi-billion kroner loans, mismanagement of large creditors, and, in the most extreme cases, giving new loans to already bad creditors so they could use that money to repay delinquent loans.
By far the largest claim is directed against 11 former top officials of Roskilde Bank, which together are being sued for one billion kroner. Those accused include the bank’s officers, directors and auditors.
The final number of defendants and amount of money at stake could change as the case develops.
Factfile | Banks told to pay up
State-owned bank auditor Finansiel Stabilitet is suing officials from six banks for 2.8 billion kroner for mismanagement of their institutions during the financial crisis:
Capinordic – three people sued for 400 million kroner
EBH Bank – 17 people sued for 700 million kroner
Eik Bank, Denmark – five people sued for 250 million kroner
Eik Bank, Faroe Islands – seven people sued for 150 million kroner
Løkken Sparekasse – seven people sued for 275 million kroner
Roskilde Bank – 11 people sued for one billion kroner