November 28, 2012 9:16 pm

DNB rally ends on dividend concerns

A recent rally in DNB came to an abrupt halt on Wednesday after investors speculated that the Norwegian lender might not be able to pay future dividends.

Their concerns were prompted by a report from the Norwegian central bank warning the country’s lenders should be obliged to hold more capital in order to reflect risky loans.

DNB’s shares fell 5.5 per cent to NKr68.50. Analysts at SEB cut their recommendation on the shares to “hold”.

More widely, European markets were mixed, with the FTSE Eurofirst 300 gaining 0.2 per cent to 1,109.27. Banks were among the worst performing stocks and the banking sub-index fell 0.4 per cent to 435.93.

Investors reacted with scepticism to an announcement from Raiffeisen that it expected non-performing loans in Hungary to improve next year.

The Austrian lender booked €190m in writedowns on its Swiss franc-denominated mortgage loans in Hungary last year. The shares lost 5 per cent to close at €31.51. Investors also sold out of rival lender Erste Bank , sending its shares down 2.2 per cent to €21.43.

Spain’s Bankia , the lender at the centre of the country’s banking crisis, said it had put its 15 per cent stake in insurer Mapfre up for sale as part of its restructuring plans.

Shares in Mapfre slid 3.7 per cent to €2.10 as investors took fright. The wider Ibex 35 index fell 0.3 per cent to 7,837.6.

Thyssen Krupp , the German steelmaker, lost ground as investors digested news that a deal in Italy had fallen through. Sogefi , the Italian car parts maker, on Tuesday walked away from talks to buy Thyssen Krupp’s suspension business.

Shares in Thyssen Krupp fell 2.5 per cent to €15.62, against a 0.2 per cent rise on the benchmark Xetra Dax index to 7,343.41.

Swedish Match was among the best performing stocks as analysts at Credit Suisse flagged the company higher. “Short-term pain, but long-term value once the dust settles,” they wrote.

The shares rallied 2.7 per cent to SKr232.10.

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