Identifier
Created
Classification
Origin
08COPENHAGEN574
2008-10-28 12:06:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Copenhagen
Cable title:
DANISH BANKING/INDUSTRIAL TITANS DOWNBEAT ON
how-toVZCZCXRO6571 PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV DE RUEHCP #0574 3021206 ZNR UUUUU ZZH P 281206Z OCT 08 FM AMEMBASSY COPENHAGEN TO RUEHC/SECSTATE WASHDC PRIORITY 4539 INFO RUCNMEM/EU MEMBER STATES PRIORITY
UNCLAS COPENHAGEN 000574
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN DA
SUBJECT: DANISH BANKING/INDUSTRIAL TITANS DOWNBEAT ON
MEDIUM-TERM ECONOMIC PROSPECTS
REF: COPENHAGEN 540 ("SAFETY NET" TO RESCUE TROUBLED
BANKS)
UNCLAS COPENHAGEN 000574
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN DA
SUBJECT: DANISH BANKING/INDUSTRIAL TITANS DOWNBEAT ON
MEDIUM-TERM ECONOMIC PROSPECTS
REF: COPENHAGEN 540 ("SAFETY NET" TO RESCUE TROUBLED
BANKS)
1. (SBU) At an October 27 dinner hosted by the Ambassador in
honor of visiting Citi Chairman Sir Win Bischoff, Danish
Central Bank Chairman Nils Bernstein was decidedly
pessimistic in his assessment of Danish economic and banking
sector prospects in the near-to-medium term. Speaking in an
impromptu group discussion among the 34 dinner guests (a
veritable who's-who of the Danish financial and corporate
world),Bernstein predicted that 2009 and 2010 will be
difficult years for Denmark, and he declined to guess when
the Danish economy would rebound. Citi's Bischoff praised
Denmark's relative banking sector stability and the quick
action taken by the Danish government to devise one of the
EU's first comprehensive bank deposit guarantee plans
(reftel),which was approved by a broad parliamentary
majority on October 10. In recent weeks, Bernstein's Central
Bank has twice raised interest rates and has reportedly spent
over USD 11 billion in an attempt to shore up the battered
Danish Kroner, which has fallen about 27 percent against the
U.S. Dollar since early July.
2. (SBU) Other guests echoed Bernstein's bleak
prognostication. Peter Staarup, CEO of Danske Bank,
Denmark's largest financial institution, stated that the
Danish banking sector would remain weak for at least the next
year. He and Bischoff attempted without success to ferret
information from Henrik Bjerre-Nielsen, head of Denmark's
chief financial regulatory agency, about possible changes in
the Danish government's approach to bank regulation in the
wake of the recently-enacted bank "safety net" deposit
guarantee scheme. Leading industrialist Steen Andersen
sounded an ominous warning of impending "massive" job
lay-offs in many sectors, particularly "traditional"
manufacturing. As an example, he noted that two companies of
which he is a board member are already making plans to lay
off 10-12 percent of their respective labor forces and will
likely cut more jobs in the coming months (we note that
Denmark currently has a historically-low unemployment rate of
about 3 percent). The lone note of optimism was voiced by
Danfoss CFO Frederik Lotz, who opined that Danish companies
would likely weather the economic doldrums better than firms
in other countries. Denmark's small size and corresponding
modest economic stature, Lotz observed, have long forced
Danish companies to innovate and operate with maximum
efficiency in order to compete in the global marketplace with
larger and more powerful rivals.
CAIN
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN DA
SUBJECT: DANISH BANKING/INDUSTRIAL TITANS DOWNBEAT ON
MEDIUM-TERM ECONOMIC PROSPECTS
REF: COPENHAGEN 540 ("SAFETY NET" TO RESCUE TROUBLED
BANKS)
1. (SBU) At an October 27 dinner hosted by the Ambassador in
honor of visiting Citi Chairman Sir Win Bischoff, Danish
Central Bank Chairman Nils Bernstein was decidedly
pessimistic in his assessment of Danish economic and banking
sector prospects in the near-to-medium term. Speaking in an
impromptu group discussion among the 34 dinner guests (a
veritable who's-who of the Danish financial and corporate
world),Bernstein predicted that 2009 and 2010 will be
difficult years for Denmark, and he declined to guess when
the Danish economy would rebound. Citi's Bischoff praised
Denmark's relative banking sector stability and the quick
action taken by the Danish government to devise one of the
EU's first comprehensive bank deposit guarantee plans
(reftel),which was approved by a broad parliamentary
majority on October 10. In recent weeks, Bernstein's Central
Bank has twice raised interest rates and has reportedly spent
over USD 11 billion in an attempt to shore up the battered
Danish Kroner, which has fallen about 27 percent against the
U.S. Dollar since early July.
2. (SBU) Other guests echoed Bernstein's bleak
prognostication. Peter Staarup, CEO of Danske Bank,
Denmark's largest financial institution, stated that the
Danish banking sector would remain weak for at least the next
year. He and Bischoff attempted without success to ferret
information from Henrik Bjerre-Nielsen, head of Denmark's
chief financial regulatory agency, about possible changes in
the Danish government's approach to bank regulation in the
wake of the recently-enacted bank "safety net" deposit
guarantee scheme. Leading industrialist Steen Andersen
sounded an ominous warning of impending "massive" job
lay-offs in many sectors, particularly "traditional"
manufacturing. As an example, he noted that two companies of
which he is a board member are already making plans to lay
off 10-12 percent of their respective labor forces and will
likely cut more jobs in the coming months (we note that
Denmark currently has a historically-low unemployment rate of
about 3 percent). The lone note of optimism was voiced by
Danfoss CFO Frederik Lotz, who opined that Danish companies
would likely weather the economic doldrums better than firms
in other countries. Denmark's small size and corresponding
modest economic stature, Lotz observed, have long forced
Danish companies to innovate and operate with maximum
efficiency in order to compete in the global marketplace with
larger and more powerful rivals.
CAIN