Danske Bank slapped with fine by EU watchdog

Five banks, including Danske Bank and Nordea, have been fined to the tune of 3.7 million kroner (495,000 euros) by the European Securities and Markets Authority (ESMA).

Danske Bank slapped with fine by EU watchdog
Photo: Kasper Palsnov/Ritzau Scanpix

The banks were sanctioned by the EU authority for issuing credit ratings without having the necessary authorisations to do so.

Danske Bank, Nordea Bank, SEB, Svenska Handelsbanken and Swedbank were fined 495,000 euros each and issued five public notices for negligently breaching the Credit Rating Agencies Regulation (CRAR), ESMA confirmed on its website.

Peter Rostrup-Nielsen, vice director with Danske Bank, said the Danish financial institution accepted the fine.

“We regret that we interpreted the rules incorrectly. It is important for us to ensure that we comply with the relevant rules,” Rostrup-Nielsen said.

Between June 2011 and August 2016, the five banks issued credit research to their clients (SEB continued to do so until May 2018).

This credit research included the issuance of what the banks described as “shadow ratings”, including opinions, deemed to meet the definition of a credit rating provided for by the CRAR, according to the press statement released by ESMA. But none of the five banks had acquired the necessary ESMA authorisation to issue ratings, thereby infringing CRAR authorisation requirements.

The assessments in question were related to assessments of the eligibility of small companies for debentures, and as such were made to meet an important demand, Rostrup-Nielsen told Ritzau.

“We are therefore now working together with others on the market to establish an independent credit assessment bureau, Nordic Credit Rating AS, which will be responsible for the credit ratings in future,” he said.

The size of the fines takes into account the aggravating factor that the banks had committed the infringement for more than six months, but also the mitigating factor that each bank has voluntarily taken measures to prevent similar infringements in future, ESMA stated in its press release.

The five banks have the right to appeal the fines.

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Danish police drop money laundering case against Danske Bank directors

Denmark’s economic crime unit SØIK has dropped potential charges for money laundering against three leading former directors of Danske Bank, Denmark’s largest bank, but investigation of the bank itself continues.

Danish police drop money laundering case against Danske Bank directors
File photo: Jacob Gronholt-Pedersen/Reuters/Ritzau Scanpix

The three directors, Thomas Borgen, Henrik Ramlau-Hansen and Lars Stensgaard Mørch were investigated in relation to a scandal involving large-scale money laundering at the Estonian division of the bank.

Each of the three confirmed to newspaper Børsen that charges have been dropped.

In a written statement to media, SØIK said it had not uncovered “evidence that any individual has shown negligence to such an extent that it can be characterised as gross” and that the law had therefore not been broken.

“For an individual to be convicted under money laundering laws, they must have committed gross negligence. In this case we have conducted a vert comprehensive and thorough investigation with a number of investigative steps,” acting head of SØIK Per Flig also said in the statement.

The bank itself is still under investigation for possible breach of money laundering laws, however, Flig noted.

READ ALSO: US files lawsuit against scandal-hit Danske Bank

No individuals now remain under suspicion in the investigation, meaning SØIK has dropped cases against all leading bank executive who were suspected by police in March 2019.

Around 1,500 billion kroner from foreign customers flowed through the Estonian division of Danske Bank between 2007 and 2015, an investigation found.

A large proportion of that money is considered to be suspicious. The scandal resulted in Borgen’s resignation as CEO and the bank closed its Estonian branch in 2019.

READ ALSO: More on the Danske Bank money laundering scandal