This content is from: Local Insights


In June the Minister for Economic Affairs tabled a proposal in parliament making it possible to merge (or cooperate through a holding company) between banks organized as savings institutions and mortgage credit institutions organized as member associations. On the same day BG Bank and Realkredit Danmark published their intention to do exactly that.

Banks organized under the rules governing BG Bank until now have been subject to rules limiting shareholders' voting rights (also in a holding company controlling a bank organized as a savings institution company). The limitation of shareholders' voting rights may now be abolished by the shareholders. The abolition may pave the way for a mortgage credit association holding the majority of votes in a merged entity — as is required by law.

A merger or cooperation between BG Bank and Realkredit Danmark may now become possible with the association owning Realkredit Danmark holding the majority of the votes in the continuing entity.The continuing entity will rank among the four largest Danish financial institutions together with Den Danske Bank, Unibank and the mortgage credit association Nykredit.

In the March 1998 issue of International Financial Law Review we commented on the Copenhagen Stock Exchange (CSE) rules on take-overs. In early June, the CSE stated that it did not find the take-over rules applied in the case of a listed company merging with another company where one shareholder after the merger holds the majority of the voting rights in the continuing entity — as will Realkredit Danmark. The CSE's statement may have been triggered by the BG Bank-Realkredit Danmark plans. It will be interesting to see if the protection of minority shareholders in a listed company is also reduced in this case.

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