Danish bank cuts jobs amid sweden bubble fears

A Danish bank has cut 3,000 jobs this month after being badly hit by the recession.

The decision by Danske Bank A/S was mostly driven by the fallout of the housing bubbles in both Denmark and Ireland, reports Bloomberg, but now the lender has another market to worry about: Sweden.

Indeed, Swedish property prices have continued to rise in recent months, regardless of the economic climate, with lending also on the up. Values increased by 2 per cent in the third quarter from the previous three-month period, according to Statistics Sweden.

 Meanwhile, across the border, Danish property prices are now 25 per cent below the market peak with further price drops expected.

"Swedish household debt has swelled to 170 percent of disposable incomes from 90 percent in the mid-1990s, the central bank estimates," adds Bloomberg.

Eivind Kolding, chief executive officer of the bank commented earlier this month: "We are concerned about the house prices in Sweden in particular, which have not seen the correction as in other economies. This is something that we have very much on the radar."

He added: "If we jointly all agree that, now, we will not loan out more, then we could adjust the bubble, but we are in a competitive environment. I don't think it's our responsibility to prevent bubbles. But it is our responsibility to make sure that, if a bubble bursts, it doesn't impact the bank too much."