Moody's downgrades Danske bank ratings over money-laundering probe
US ratings agency Moody's on Friday downgraded its long-term ratings for Denmark's biggest bank, Danske Bank, which is at the centre of a scandal over alleged money-laundering.
The decision "follows the announcement that the bank is the subject of criminal investigations by the US Department of Justice linked to money laundering through its Estonian branch between 2007-2015," Moody's said in a statement.
Investors and clients have already headed for the exits amid growing fears of a possibly huge US fine for laundering funds for 15,000 mainly Russian clients.
Danske Bank has itself identified the equivalent of 200 billion euros in "suspicious" transactions from 2007-2015 on behalf of 15,000 clients, including top Russian politicians and companies based in Denmark.
According to a Financial Times report, 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".
The ratings agency downgraded its long-term deposit and senior unsecured debt ratings from A1 to A2. Both ratings are within Moody's "upper-medium grade".
The money-laundering investigation "has increased the probability that Danske will receive substantial financial fines," Moody's said, adding that the probe will also "consume a significant amount of resources and managerial focus".
Denmark, like its Nordic neighbours, is considered a model of transparent governance, and the total amount of the suspicious transactions is 10 times Estonia's national output in 2014.
Comments
See Also
The decision "follows the announcement that the bank is the subject of criminal investigations by the US Department of Justice linked to money laundering through its Estonian branch between 2007-2015," Moody's said in a statement.
Investors and clients have already headed for the exits amid growing fears of a possibly huge US fine for laundering funds for 15,000 mainly Russian clients.
Danske Bank has itself identified the equivalent of 200 billion euros in "suspicious" transactions from 2007-2015 on behalf of 15,000 clients, including top Russian politicians and companies based in Denmark.
According to a Financial Times report, 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".
The ratings agency downgraded its long-term deposit and senior unsecured debt ratings from A1 to A2. Both ratings are within Moody's "upper-medium grade".
The money-laundering investigation "has increased the probability that Danske will receive substantial financial fines," Moody's said, adding that the probe will also "consume a significant amount of resources and managerial focus".
Denmark, like its Nordic neighbours, is considered a model of transparent governance, and the total amount of the suspicious transactions is 10 times Estonia's national output in 2014.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.