Realkredit Danmark is one of Denmark’s largest providers of mortgage finance. Realkredit Danmark became part of the Danske Bank Group in 2001, but it all began in 1797, when a credit association of Copenhagen homeowners (“Kreditkassen for Husejere i København”) was founded after a major fire in Copenhagen.
Eighteenth century – the great fire in Copenhagen
The credit association of homeowners came into being because the reconstruction of the city required financing after the great fire in 1795. 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 institutions were founded. One of them 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, some were dissatisfied with the fact that Østifternes Kreditforening granted most of their loans to borrowers in Copenhagen and North Sealand. This led to the initiative to establish Østifternes Kreditkasse.
Discontent also led to the establishment of Den Danske Landsmandsbank – later Danske Bank – which was given permission to issue ‘hypoteklån’ (mortgage loans exceeding the 60% lending limit existing at that time).
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 any risk to the individual borrower. In 1895, the first ‘hypotekforeninger’ (second-mortgage institutions) lending up to 75% were established.
1920-1970 – cautious times
Around 1920, Denmark had 13 mortgage credit institutions and nine second-mortgage institutions. They had no common structure, and competition 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 among the institutions in the 1970s. Four institutions – Østifternes Kreditforening, Grundejernes Hypotekforening, Provinshypotek-foreningen for Danmark and Ny Jydsk Grundejer Kreditforening – joined forces in 1972 to become Kreditforeningen Danmark.
1993 – establishment of Realkredit Danmark
In 1993, Kreditforeningen Danmark changed its form, splitting into an association, a holding company and a limited liability company. Foreningen KD (an association) was the single owner of all the shares in KD Holding A/S, which again owned all the shares in Realkredit Danmark A/S. Realkredit Danmark A/S was the proper provider of mortgage loans.
1998 – merger between Realkredit Danmark and BG Bank
Realkredit Danmark and BG Bank merged in the autumn of 1998, and Kapital Holding A/S (a holding company) was set up. Foreningen KD owned about 60% of the shares in Kapital Holding A/S. The strategy was for the two renowned and well-respected companies to continue as independent brands. The holding company later changed its name to RealDanmark.
2000 – establishment of Fonden Realdania
Fonden Realdania (a foundation) was established in the autumn of 2000, when Foreningen KD sold its shares in RealDanmark (Realkredit Danmark A/S and BG Bank) to Danske Bank. With this sale, Foreningen KD set itself up as Fonden Realdania. The foundation was to provide financial support for charitable purposes only.
2001 – Realkredit Danmark an integral part of the Danske Bank Group
On January 1, 2001, Realkredit Danmark A/S became part of the Danske Bank Group. Realkredit Danmark A/S continues its operations as an independent unit of the Danske Bank Group.