Denmark Forced to Bail Out $7 Billion Bank

The Danish central bank said Monday it has taken over the country's eighth largest bank after it was hit by the subprime housing crisis.

Nationalbanken said it had bought Roskilde Bank for 37.3 billion kroner ($7.43 billion) because the stock-listed bank failed to find a buyer to take it over.

Last month the central bank granted a liquidity facility to Roskilde Bank and bought its debt until it could be resold.

Roskilde Bank had a balance sheet of 42.9 billion Danish kroner ($8.9 billion) at the end of March. A large part of its loans were for real estate.

The move came because an audit of Roskilde Bank's interim report over the weekend revealed additional losses.

Nationalbanken said that it has the backing of the government and would get a guarantee to cover any losses it might suffer in the takeover. Roskilde Bank's operations will continue in a new bank under the same name, it said.

Bailouts are rare in Denmark. Nationalbanken has only rescued a few banks in crisis, most recently in 1984.