Realkredit Danmark became a part of the Danske Bank Group in 2001, but its history stretches back to 1797 when, after a major fire in Copenhagen, the “Kreditkassen for Husejere i Kjøbenhavn” (The Credit Association of Copenhagen Homeowners) was founded.
Eighteenth century – conflagration in Copenhagen
The Kreditkassen came into being because the reconstruction of the city required financing. It was an association of borrowers and the first example of what later developed into a mortgage credit institution. However, it was not until 1851 that the first of these institutions was founded. One of the first was “Østifternes Kreditforening”, which later became part of Realkredit Danmark.
Nineteenth century – discontent affects development
Throughout the 1860s bond prices fell steadily, making it difficult to attract investors. Also, in some quarters there was dissatisfaction with the fact that Østifternes Kreditforening granted most loans in Copenhagen and North Zealand. This led to the initiative to establish “Østifternes Kreditkasse”.
Discontent also led to the founding of Den Danske Landmandsbank, which was granted permission to issue “hypoteklån”, mortgage loans that exceeded the 60% lending ceiling. The previous limit meant that the “old” members of the mortgage credit institutions were fairly certain that the principle of joint and several liability did not pose a risk to the individual borrower. In 1895, the first “hypotekforeninger” (second-mortgage institutions) that lent up to 75% were established.
1920-1970 – cautious times
Around 1920, Denmark had 13 mortgage credit institutions and nine “hypotekforeninger”. They had no common structure, and competitive conditions varied. Nevertheless, the lending policies of both types of institution continued to err on the side of caution. In 1970, new mortgage credit legislation came into effect. This lowered the typical maturity of loans to 30 years, making it possible for borrowers to source all their mortgage borrowing requirements from the same institution.
This resulted in mergers, and four institutions – Østifternes Kreditforening, Grundejernes Hypotekforening, Provinshypotek-foreningen for Danmark and Ny Jydsk Grundejer-Kreditforening – joined forces to become “Kreditforeningen Danmark”.
1989 – radical amendments to mortgage legislation
During the 1980s, there was a gradual liberalisation of the mortgage lending regulations. In 1989, the concept of associations was finally abandoned with the passing of radical amendments to mortgage legislation.
1993 – Kreditforeningen Danmark becomes Realkredit Danmark
In 1993, Kreditforeningen Danmark changed its name to Realkredit Danmark. In 1998, Realkredit Danmark and BG Bank joined forces to create a jointly owned mortgage finance company, BG Kredit. The partners also formed the holding company Kapital Holding A/S, later RealDanmark. In 2001, RealDanmark merged with the Danske Bank Group.