Danske Bank admits ‘huge task’ to regain trust as customers flee
The acting head of Danske Bank acknowledged Thursday that the Danish lender has its work cut out to regain trust after becoming embroiled in a massive money-laundering scandal.
Published: 1 November 2018 17:17 CET
Photo: Mads Claus Rasmussen/Ritzau Scanpix
“We know that we have a huge task ahead of us in restoring the trust of our customers and society,” acting chief executive Jesper Nielsen said as the company released its first quarterly earnings since revelations of the staggering scale of potentially suspect money that flowed through the bank's Estonian branch.
Investigators in Denmark, the United States, Brussels and London are looking into Danske's Estonian unit between 2007 and 2015, with the focus on 15,000 non-resident clients, including many Russians.
Danske has acknowledged that much of the approximately €200 billion ($230 billion) that went through the branch during that period may need to be treated as suspicious in origin. The bank, which has seen its market capitalisation tumble by nearly half since the start of the year, said Thursday it took a major hit to third-quarter earnings.
However, the drop in net profit to 2.3 billion kroner (308 million euros, $351 million) from 4.7 billion last year was due in large part to a contribution of 1.5 billion kronor to a foundation that fights financial crime. Excluding that and exceptional costs to strengthen anti-money-laundering efforts, the dip in net profit was in the low single digits. It reported lending growth across the Nordic countries for the first nine months of the year.
“Overall it's a good report,” said Sydbank analyst Mikkel Emil Jensen. “It shows that the previous momentum has continued especially when you look at volumes outside Denmark.”
The bank's shares rose by as much as 6.5 percent following the earnings report, although they missed analyst expectations. Jensen said that the rise was due to investor relief that the bank's momentum in its operations was continuing.
“The big question is still about potential fines,” he noted, adding that the uncertainty about the size of fines it will face will likely affect the share price for some time.
Berlingske reported on Thursday that some 2,500 Danske Bank customers decided to take their business elsewhere during the third quarter. Interim CEO Nielsen acknowledged that the scandal has sent some customers elsewhere.
“We are sad to lose each individual customer. We are doing as much as we can to reach out to the customers, but there is no doubt that when there are questions hanging over us there are likely to be negative customer numbers,” he told the newspaper.
Denmark's financial market watchdog has ordered Danske Bank to set aside 10 billion Danish kroner to cover the potential fallout from the scandal, but that may not be enough to cover the eventual fines.
Url copied to clipboard!