BankNordik P/F - Company Announcement

The Danish FSA’s ordinary inspection of BankNordik

The Financial Supervisory Authority rates the credit quality in BankNordik
higher than average in the sector. The Financial Supervisory Authority also
points to areas, where the Bank must strengthen its procedures in light of its
significant growth. BankNordik shares this assessment and published already 6
June 2011 (before the Financial Supervisory Authority's inspection) a
significant strengthening of its management, which came into effect shortly
thereafter. 

The Danish Financial Supervisory Authority (“FSA”) conducted an ordinary
inspection of BankNordik during the period from 20 June to 1 July 2011, i.e.
after the publication on 19 May 2011 of the agreement regarding the acquisition
of the healthy parts of Amagerbanken, but prior to the implementation of the
acquisition effective 1 July 2011. 

The following risk areas were reviewed during the inspection: The work of the
Board of Directors and Executive Management, the Bank's calculation of the
solvency requirement, credit risk, market risk, liquidity risk, the financial
area, the IT area, audit, and Group matters. The results of the inspection are
communicated in a detailed report to the Board of Directors, the Executive
Management, and the auditors and are summarized in a report, which must be
published. 



Credit quality above average

The review of the Bank's credits included the 75 largest exposures in the Faroe
Islands and Greenland and the 74 largest exposures in Denmark. In total, these
exposures comprised approximately 40 per cent of the Bank's total loans and
guarantees at the time. 

The FSA found the quality of credits of BankNordik to be above average among
the medium-sized banks (category 2). This applied to all three geographic areas
of activity: The Faroe Islands, Denmark and Greenland. Only in respect of one
single exposure the FSA found it necessary to increase depreciation by DKK 1.6
million. "BankNordik's management notes the FSA assessment with satisfaction. A tight
credit control has been and will remain a key part of the Bank's strategy and
culture," says Janus Petersen, CEO of BankNordik. 



Solvency statements corrected

The FSA pointed out various errors and misunderstandings regarding the Bank's
earlier calculations of the solvency requirement. The identified issues were
corrected in connection with the publication 22 August 2011 of the Interim
Report for the second quarter of 2011, which showed a solvency ratio of 14.5
per cent (adjusted for the addition of activities from Amagerbanken and a
capital increase in this connection) and a solvency requirement of 8.8 per
cent. 

By the end of the third quarter the solvency ratio was 15.0 per cent and the
solvency requirement 9.0 per cent. 

The Authority issued various orders and risk notifications to the Bank
regarding management, credit control and IT security. "BankNordik's management acknowledge the assessments of the FSA, and we
published already 6 June 2011 (before the Financial Supervisory Authority's
inspection) a significant strengthening of our management, which came into
effect shortly thereafter" says Janus Petersen on behalf of the entire
management. 



Much larger bank in a short time

With the acquisition of the healthy parts of Amagerbanken this year and 12
Danish and Greenlandic branches from Sparbank last year BankNordik has
undergone a very strong growth in a short period of time. That was the reason
for the significant strengthening of the executive management, which the Bank
published 6 June 2011 - prior to the Financial Services Authority's inspection
in late June - but which only came into force after the summer. "During the past two years BankNordik has exploited attractive opportunities to
pursue its strategy of controlled growth in Denmark. Now focus is on
integration and consolidation. Subsequently, we see good opportunities for
continued growth in both activity and profitability, based on the broader
business base," says Janus Petersen. 

The report from the FSA, dated 21 November 2011, on its ordinary inspection of
BankNordik in June 2011 is attached to this announcement (two pages). 



Further information

Klaus Rasmussen, Chairman of the Board, phone (+298) 330 323

Janus Petersen, CEO, phone (+298) 330 340



BankNordik was founded over 100 years ago in the Faroe Islands. The Group has
banking activities in Denmark and Greenland and the Faroe Islands and insurance
activities on the Faroe Islands and Iceland. The Bank has total assets of DKK
19 billion and more than 600 employees. The Bank is subject to the Danish
Financial Services Authority and is listed on NASDAQ OMX Copenhagen. BankNordik
has five branches in the Faroe Islands, three in Greenland and 19 in Denmark,
hereof several in the growth centres of Copenhagen, Aarhus, Odense and the
Triangle area. www.banknordik.dk.

Attachments:

Redegrelse Finanstilsynet - UK Translation.pdf