Moody's downgrades 6 Danish banks

19 May 2011

Credit ratings of six banks in Denmark have been downgraded by Moody's Investors Service.

The ratings agency made the cuts following failings at regional lender Amagerbanken that resulted in the European Union's first senior credit losses, Bloomberg reports.

According to Moody's, the moves were based on the "weakened intrinsic strength" of the lenders, including Danske Bank.

The 41 per cent loss on unsecured senior bonds had come after Amagerbanken fell into difficulty.

Analyst at the agency Oscar Heemskerk said there is evidence to suggest funding costs are on the increase, but this is viewed as more of a long-term issue.

"It could lead to foreign investors scrutinizing Danish banks more, making funding more difficult to obtain and more expensive," he added.

Last month, Moody's warned that a number of banks in the UK could be at risk of a ratings cut to reflect the decreasing likelihood of a future government bailout.

By Claire Archer

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