Max Bank to transfer assets and liabilities, file wind-up petition

By Caroline Salls

Pittsburgh, Oct. 14 - Max Bank A/S has entered into an agreement with the Financial Stability Co. regarding the wind-up of all of the bank's assets and liabilities under its bank aid package IV model II, except its share capital and subordinate capital and interest, according to a news release.

The assets and liabilities will be transferred to a newly established company called Max Bank af 2011 A/S.

Copenhagen-based Max Bank said in the release that it will file a petition for wind-up proceedings. The new bank will be open to customers on Monday, and Financial Stability has made liquidity available to new bank.

Current employees will continue with Max Bank af 2011.

According to the release, the Danish Financial Supervisory Authority (FSA) has demanded further write-downs for impairment and laid down an increased solvency requirement for Max Bank.

Max Bank said it entered into the wind-up agreement because it was not able to secure the capital needed to comply with the 18% increased solvency requirement by the Oct. 9 deadline, according to the release.

As a result of the wind-up agreement, the deadline for meeting the solvency requirement has been extended to Nov. 7 to allow a smooth transfer of the assets.

The release shows stricter requirements for write-downs and increased solvency requirement resulted from an FSA examination of the bank's exposures.

"The primary difference between the bank's former assessment of its own risks and the FSA's assessment is based specifically on the FSA's lower valuation of real estate collateral," Max Bank said in the release.

The bank said the increased write-down and solvency requirements are tied to lending exposures in the real estate sector, which were incurred five to seven years ago.

Max Bank said in the release that it "has not succeeded in disengaging itself [from the exposures] as a result of the financial crisis and the credit squeeze in general."

The bank said no general creditors or depositors will suffer losses under the wind-up agreement.

In addition, Max Bank said it has asked Nasdaq OMX Copenhagen to suspend trading in all shares and bonds issued by the bank, according to the news release.

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