Hedge Fund Headache Slashes Danish Bank's Profit

Jan 31 2012 | 5:53pm ET

Denmark's second-biggest bank has taken a big hit in its bottom line, thanks to the country's second-ever class-action lawsuit.

Jyske Bank said it put aside 229 million Danish kroner (US$40 million) to cover any possible liability from the lawsuit, filed by angry investors in one of the bank's hedge funds. That, combined with a 299 million kroner write-down of its exposure to Greek sovereign debt, cut Jyske's profit by 40% to 601 million krnoer.

Jyske pronounced the results "tolerable considering the economic situation and the adverse effect from special circumstances of just below 500 million kroner on the profit."

Jyske said last week that it planned to appeal the Danish High Court decision allowing the class-action to the country's Supreme Court, and that it would review other legal options.

Investors have sued the bank over the Jyske Invest Hedge Markedneutral-Obligationer levered bond fund, which lost 800 million Danish kroner in performance terms in 2008. Jyske has already been sued 43 times over the hedge, losing 25 of those cases, and in 2009 was reprimanded by the Danish Financial Supervisory Authority for providing an "insufficient description" of the fund to clients.


In Depth

Dillon Eustace: The Advantages of ICAVs

Feb 11 2016 | 7:51pm ET

As the growth of alternative investment vehicles continues, global asset managers...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedge Fund Marketing - Making the Most of Your Salesperson

Jan 20 2016 | 8:11pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth takes a close...