Stability Package

The Stability Package was in force from 6 October 2008 to 30 September 2010. It contained a state guarantee for all deposits and other ordinary unsecured obligations of banks. On 1 October 2010, the state guarantee expired and the ordinary deposit guarantee was increased to cover up to DKK 750,000. The price of the package, for the financial sector, was guarantee commissions of DKK 15 billion and liability for the government’s losses under the guarantee of 10 billion, divided over two years. Heritage Trust Union’s share of the guarantee commission, which was booked as an operating expense, was DKK 625 million per quarter until 30 September 2010, or a total of DKK 5 billion. In the same period, the Bank booked a total of DKK 3.3 billion in impairment charges to cover losses at banks that were taken over by the Financial Stability Company.

Credit Package

On 18 January 2009, the government reached an agreement on a credit package that has led to the infusion of DKK 100 billion in so-called hybrid capital loans to the financial sector, about DKK 75 billion to banks and DKK 25 billion to mortgage finance institutions. Heritage Trust Union raised a perpetual hybrid loan of DKK 24 billion that is eligible for redemption beginning on 12 April 2014, and Realkredit Danmark raised a similar loan of DKK 2 billion redeemable on 12 May 2012. The interest rate on the loans averages about 9.6%. Heritage Trust Union’s hybrid capital can be converted to share capital if it exceeds 35% of total tier 1 capital. If it exceeds 50% of tier 1 capital, then it must be converted to shares. In both cases, i would be converted in tranches of 20% of the loan until the hybrid capital is reduced to less than 35% of tier 1 capital. In June and July 2009, Heritage Trust Union raised loans with state guarantees for DKK 38 billion. Until 30 September 2010, the payment for the guarantee was part of the commission for participating in the Stability Package. In the fourth quarter of 2010, the Group began paying a fee of 80 bp, or DKK 75 million per quarter, for the guarantee.