Funding Strategy

As per our Annual Report 2011 the liquidity position remains solid and at almost 110 per cent above the regulatory requirements it supports financing needs for at least the coming 12 months.

The level of debt falling due in the first half of 2012 is limited, but later in 2012 and 2013 nominal debt of DKK 48 billion comes due, of which around DKK 42 billion is Government Guaranteed Bonds maturing second half of 2012 and approximately one year ahead. These figures are illustrated in the debt maturity profile (read more following this link)

FIH will repay debt through execution of the business strategy.
This is in essence by end of 2013 to bring the funding needs below DKK 10 billion based on:

  • Reduction of the lending balance
  • Increasing deposits
  • Release liquidity from both lower regulatory requirements and liquidity surplus

Debt repayments during first half of 2013 could strain liquidity, but contingency facilities are in place and operational.

Liquidity contingencies consist of:

  • The ATP-facility which is operational and undrawn – current liquidity potential is DKK 5.3 billion
  • Unsold Government Guaranteed Bonds maturing July 2013 – liquidity equivalent to DKK 3.1 billion (after haircuts)
  • Danish Central Bank repo facility – liquidity potential of DKK 4.2 billion (after haircuts)

FIH views the 3 year repo-facility offered by the Danish Central Bank facility as a positive initiative, but does not view the facility as a sustainable funding source. FIH has though examined terms and conditions for the facility; and in December 2011 the external auditors verified a liquidity potential of DKK 4.2 billion (after haircuts). The internal processes have been prepared and the facility could within a short time frame be fully operational. FIH had by the time of release of the Annual Report 2011 not applied for the facility.

FIH is simultaneously reviewing funding sources, less dependent on the credit rating, i.e.:

  • Restoring the deposit base from business customers, financial institutions, but also retail customers served through FIH Direct Bank

Establish alternative funding sources allowing FIH to utilise opportunities of raising secured funds on assets, which could be based on the Danish Mortgage Bond legislation