Valuation of Danske Bank: In Respect to the Basel III Requirements and Trends in Digitalization

Timo Maus

Student thesis: Master thesis

Abstract

This thesis examines the value of Danske Bank in order to estimate the fair stock price of Danske Bank. In the course of the preparation of the valuation, three trends have been identified prevailing in the financial service industry, including Capital Requirements, Digitalization and prevention of Fraud & Anti-Money Laundering. The valuation demonstrates that capital requirements – and especially the leverage ratio - adversely affect the value of Danske Banks. However, as the Basel Committee has not decided yet on the required leverage ratio in 2018, the valuation includes both a scenarios with and without changes. Furthermore digitalization has been identified as a critical source to drive Danske Bank’s profits in the future. It demonstrates great opportunities to gain the market lead in the future, but also impose a thread in respect to the competition. The emphasis lies on Danske Banks potentials to react to the dynamic and developing environment in digital banking. The results of the valuation indicate that investors do not expect leverage ratios to increase, as the result of the valuation coincides with current stock prices of Danske Banks. An increase of the leverage ratio, however, implies that Danske Bank’s stock price is overstated.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages103