Danske shares plunge on US fine fears

Shares in Danske Bank plunged by almost nine percent on Friday as fears of a possible huge US fine for money laundering swept over Denmark's biggest lender.

Danske shares plunge on US fine fears
File photo: Thomas Lekfeldt/Ritzau Scanpix

The banks' shares showed a drop of 8.95 percent to 144.40 kroner on an overall weaker Copenhagen stock exchange, a day after Danske said it was cooperating with a US investigation into suspicious transactions totalling 200 billion euros over seven years at its subsidiary in Estonia.

Since the start of the year, shares in Danske Bank have lost around 40 percent of their value.

Sydbank analyst Mikkel Emil Jensen said that on Friday, the shares were hit by revelations in the Financial Times about “mirror trading” activities at the Estonian unit.

The practice reportedly involved Russian clients who bought securities in rubles and then sold identical ones for dollars and euros.

The practice is legal but can alert investigators to potential money laundering schemes.

Danske Bank said it had identified “suspicious” transactions from 2007 – 2015 on behalf of 15,000 clients, including top Russian politicians and companies based in Denmark.

According to the FT, which cited an internal bank memo, Danske earned 10 million euros in 2013 through mirror trades that used Russian bonds, which the Danish lender acknowledged raised a “potential reputational risk in being seen to be assisting 'capital flight' from Russia”.

Denmark, like its Nordic neighbours, is considered an example of transparent governance, and the amount of the suspicious transactions is 10 times Estonia's national output in 2014.

The bank's former chief executive, Thomas Borgen, resigned in September.

Denmark's financial market watchdog has ordered Danske to set aside 10 billion Danish kroner (1.5 billion euros) to cover potential fallout from the scandal.

The biggest German bank, Deutsche Bank, was fined almost 630 million dollars last year by British and US financial authorities who had investigated money laundering in Russia.

READ MORE: The Local's coverage of the Danske Bank money laundering scandal


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