Denmark doubles capital buffer to contain wider Danske Bank risks

Re:Denmark doubles capital buffer to contain wider Danske Ba... by drb91 on Tuesday September 25, 2018 @12:47PM (#18068000)

Yikes. Sounds shitty for EU residents in the long term. Wouldn’t it be better to let the bank fail, ie learn from 2008 that bailing out encourages the bad behavior?

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Re:Denmark doubles capital buffer to contain wider Danske Ba... by charlesdm on Tuesday September 25, 2018 @01:04PM (#18068179)

This is actually great for EU residents, as shareholders and bondholders will (initially) be on the hook for excess risks being taken, not residents.

Not all bank shareholders were wiped out in 2008, while they clearly should have based on the amount of public money some banks got.

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Re:Denmark doubles capital buffer to contain wider Danske Ba... by ismail on Tuesday September 25, 2018 @03:28PM (#18069667)

Does the ECB hold bonds for Danske bank? The ECB and other central banks have been on a bond buying [0] 'spree' [1]

If the ECB holds these bonds then technically eu monetary union citizens do have exposure.

To me this seems to have been a dangerous decision by the ECB and other central banks. With their policy, could this have created a situation whereby companies that would not otherwise survive are now over-leveraged. The result being a small disruption bringing everything down with it?

To put the question another way, do we have a massive bubble in corporate debt due to central bank polcies, resulting in companies that should have gone under being over-leveraged.

With the ECB planning to stop the buying by end 2018, will we see a correction?

[0] https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.h...

[1] https://www.wsj.com/articles/central-banks-put-squeeze-on-so...

Edit:

According to JP morgan [3] the policy has created 'zombie' companies.

[3] https://www.bloomberg.com/news/articles/2018-07-18/jpmorgan-...

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Re:Denmark doubles capital buffer to contain wider Danske Ba... by drb91 on Tuesday September 25, 2018 @02:01PM (#18068827)

Ahh, after some googling I see what you’re saying. Thank you!

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