Danske Bank in €1.2bn writedown

Denmark’s biggest bank will write down 9 billion kroner (€1.2bn) in goodwill, marking its latest accounting adjustment after talks with the country’s regulator. Danske Bank will book the impairment in its 2014 annual report, it said in a statement.

Shareholders’ equity will be cut by the same amount and the writedown won’t affect its 2014 forecasts for profit, the bank said.

Danske is also maintaining its long-term target for a return on equity of “more than” 12%, Henrik Ramlau-Hansen, chief financial officer, said by phone.

“This has no practical implications. It won’t impact our capital, it won’t influence our liquidity or the daily operations or the plans we have for the bank in the coming years,” he said.

Shares in Danske lost up to 1.9% and traded 1.7% lower at 9:33 am. The bank said the writedowns relate to its business in Finland, where the economy is still contracting, and operations in Northern Ireland and Estonia.

Danske has struggled to scale back its presence in markets hit by Europe’s debt crisis as the lender cuts costs to compete with Swedish rivals. Talks with the Financial Supervisory Authority in Copenhagen focused on Danske’s ability to cope with varying interest-rate climates, Ramlau-Hansen said.

Yesterday’s writedowns “are mainly due to the rate level”, he said. Danske assumes interest rates won’t start to rise for years, he said. “The impairment is based on the fact that we’re seeing rate levels continuing to fall throughout 2014 and there’s a lot to suggest that rate levels will remain very, very low for a very long time,” Ramlau-Hansen said.