F in Dialogue with The Danish Financial Services Authority regarding Capital Requirements

Eik Banki P/F 

27.09.2010 08:55

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1.	Investigations of the Danish Financial Services Authority

In extension of investigations performed by the Danish Financial Services
Authority (FSA) Eik Banki P/F and its Danish subsidiary Eik Bank Danmark A/S
have within recent days been in dialogue with the FSA in relation to an
expectation that Eik Banki P/F and Eik Bank Danmark A/S will be required to
make write downs and increase solvency requirements. 

At present no decision requiring write downs or increase of solvency
requirements has been made by the FSA. The bank expects that already today and
thus before 30 September 2010 requirements will be made which will necessitate
injection of further capital of a substantial size in Eik Banki P/F as well as
in Eik Bank Danmark A/S within a deadline decided by the FSA. 


2.	Continued security for Depositors and Ordinary Creditors in Eik Banki P/F og
Eik Bank Danmark A/S 

Both Eik Banki P/F and Eik Bank Danmark A/S are members of the Private
Contingency Association and depositors and ordinary creditors are therefore
comprised by the general Danish government guarantee for depositors and
ordinary creditors in Danish banks. 

Generally, the guarantee scheme expires on 30 September 2010. However, the
Danish Act on Financial Stability includes a transitional section which implies
that the guarantee scheme will also be in force after 30 September 2010, if the
FSA no later than 30 September 2010 has set a deadline for the bank to
re-establish its capital. The FSA has stated, that in the view of the FSA, the
guarantee scheme will also be in force if the deadline is extended after 30
September 2010, if that is decided before the expiry of the deadline
established pursuant to section 225(1) of the Danish Financial Business Act.
This should be seen in the light of the position that an extension of such
deadline will only be granted where plans for re-establishment shows that there
is a certain degree of probability that re-establishing the capital of the bank
is possible. The Danish Ministry of Economic and Business Affairs, which is
responsible for the act, has confirmed that they have a view similar to that of
the FSA in this respect. 


3.	Capital Injection in Eik Banki P/F

On the basis of these expectations the bank has initiated a dialogue with two
potential investors; namely TF Holding P/F, the holding company behind
Tryggingarfelagið Føroyar P/F and the home rule government. 

TF Holding has signed a letter of intent regarding injection of DKK 400 million
into Eik Bank P/F under certain terms, including the term that Eik Bank P/F
will not be obliged to inject capital into Eik Bank Danmark A/S. Eik Banki P/F
has further been in dialogue with the home rule government regarding the
possibilities for  participating in a share issue by Eik Banki P/F. 

A share issue by the bank is expected to be completed with pre-emptive
subscription rights allowing all existing shareholders to subscribe for new
shares. 


Sincerely

Odd Bjellvåg		Finn Danberg
Chairman of the Board		Director, CFO

News Source: NASDAQ OMX



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Language:     English
Company:      Eik Banki P/F
              
               
              Faeroe Islands
Phone:        
Fax:          
E-mail:       
Internet:     
ISIN:         FO0005702340
WKN:          
 
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