Denmark’s Den Danske Bank is facing a series of lawsuits from Danish pension funds which could total Dkr1.5bn (e200m), following the bank’s involvement in the sale of equities for life insurance group Hafnia, which collapsed in 1992.
Three of the country’s largest schemes, the Kommunernes Pensionsforsikring (KP) fund for local authority employees and two social insurance funds ATP and LD, announced they were to issue writs against Den Danske.
Former life insurance group Hafnia sought to increase its capital base in 1992 whilst attempting to takeover insurers Scandia and Baltica.
Den Danske Bank issued an investment prospectus showing Hafnia to have hidden reserves of Dkr2-3bn.
Following the country’s no vote to the Maastrich treaty and the subsequent sharp fall in the Danish market, Hafnia declared itself bankrupt.
A spokesperson for the Kommunernes Pensionsforsikring (KP), comments: “The board of the KP pension fund decided in a meeting at the end of September to take legal action against Den Danske Bank for losses in connection with stock omission at the end of 1992.
“At that moment we bought new stock to the value of Dkr332m. The total loss to the fund was Dkr463.8m.”
The cases have been prompted by court awards against Den Danske and former managers of Hafnia to two private investors. “The board has taken the decision that this recent court decision has changed the assumption previously held.”
The KP pension fund is not pursuing the case with the ATP and LD funds, although the spokesperson added this was a possibility.
Henrik Kilsgaard, of Den Danske Bank, comments: “We haven’t seen a writ yet.” He adds “We have said we will not pay the pension funds without any court proceedings. We will not do this voluntarily.”
Kilsgaard says total assets invested in Hafnia were approximately Dkr2bn.
Hugh Wheelan