Senior bondholders to face losses as another Danish bank fails

Fjordbank Mors has become the ninth Danish bank to collapse since the financial crisis erupted in 2008 after it announced over the weekend that it was to be taken over by Finansiel Stabilitet, the Danish state company charged with managing and winding up distressed banks. 

Creditors, including depositors with deposits exceeding €100,000 with the bank, will face losses of approximately 26% according to the Financial Supervisory Authority (FSA) of Denmark.

Fjordbank Mors announced on Friday evening that it could no longer meet the FSA's increased solvency requirements and that it would seek to be taken over and wound up by Finansiel Stabilitet.

The Danish government surprised markets and laid down a marker in February when it allowed senior bondholders in Amagerbanken to take losses, as it sought to protect Danish taxpayers from the costs of banking failures.