Tuesday 18 December 2018

Danske Bank puts €2.4bn aside for money-laundering case

Danske Bank is being investigated by the US Justice Department. Photo: PA
Danske Bank is being investigated by the US Justice Department. Photo: PA

Frances Schwartzkopff

Danske Bank has built a capital buffer of as much as $2.7bn (€2.38bn) to absorb potential fines as it deals with the fallout of its role in one of Europe's worst-ever money laundering scandals.

Acting CEO Jesper Nielsen says the amount "significantly" exceeds what Denmark's regulator has ordered Danske to hold in connection with the laundering case. He also said the bank is continuing to build that reserve.

Mr Nielsen said that's because the bank wants to "basically do what it takes to create the confidence needed to show we are strong and well-capitalised."

Danske is being investigated by the US Justice Department after acknowledging its Estonian operations were a central causeway in Europe for illicit funds from the former Soviet Union. The case spans at least nine years into 2015 with about $230bn in flows under scrutiny.

Denmark's regulator told Danske to hold about $1.5bn in capital to prepare for potential penalties, prompting the bank to shelve its share buyback programme.

Investor anxiety about how much Danske may be facing in fines has driven the bank's share price down by about 45pc this year, wiping roughly $16bn off its market value.

Mr Nielsen, who became acting CEO after Thomas Borgen was forced out in October because of his role in the laundering scandal, says Danske will keep setting aside profits to build capital.

But the lender intends to maintain its dividend policy, he said in Copenhagen.

Denmark has already brought preliminary charges against Danske, focusing on its failure to adequately screen suspicious clients. Mr Nielsen said the bank is "not in a position to contest a lot".

"What we're doing right now is co-operating with authorities," he said. Mr Nielsen has been named as a possible permanent replacement for Mr Borgen.

Yesterday, he signalled he might consider the job.

Bloomberg

Irish Independent

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