October 10, 2008
Dear Shareholder,
Danske Bank Group participates, along with a number of other Danish banks, in the
guarantee adopted by the Danish Folketing on October 10, 2008. The guarantee runs for two years and unconditionally covers the liabilities of Danish banks.
By providing this guarantee, the Danish government aims at restoring calm and ensuring sufficient liquidity in the Danish financial system during the turbulent international
financial crisis.
As we fear a prolonged and destructive crisis, our Board of Directors has decided to let the Bank participate in the guarantee because it is expected to help unlock the financial markets.
The Board made this decision although Danske Bank is a strong bank with shareholders' equity exceeding DKr100bn and with good international ratings, and despite the costs and conditions involved.
The guarantee imposes costs on the Bank in the form of operating expenses for an annual
guarantee commission of DKr2.5bn during the two-year period.
In addition, we are obliged to contribute a certain amount of re-capitalisation or other financial support to Danish banks that experience solvency problems. Danske Bank's maximum potential gross contribution for this is about DKr6bn. Half of that amount, DKr3bn, will not fall due unless the total need for support to the Danish financial sector exceeds DKr25bn. We do not expect that we will have to pay the final DKr3bn.
We believe that the guarantee will contribute to reducing Danske Bank's funding costs during the period.
Moreover, the agreement with the Danish government prohibits dividend payments for a two-year period. We regret this but understand the wish to strengthen the capital base of the financial sector. Consequently, Danske Bank's shareholders will not receive dividends for the financial years 2008 and 2009, instead we will retain earnings. This will benefit our capital base and support the price of our shares and the basis for future dividend payments.
Against this background, Danske Bank expects to propose dividend payments in the first quarter of 2011 on the basis of its capital position and the profit reported for 2010.
We believe that the years ahead will pose considerable challenges to all financial institutions. The management believes, however, that we have a strong platform that will help the Danske Bank Group through the financial crisis and reinforce our position.
Finally, we assure you that all our employees are dedicated to achieving the best possible results for our shareholders.
Yours faithfully,
Alf Duch-Pedersen
Chairman of the Board of Directors
Peter Straarup
Chairman of the Executive Board
Published on October 14, 2008