More scandal at Danske Bank as interim Danish CEO fired

Danske Bank, which is struggling to restore public confidence after a huge money laundering scandal, said Monday it had fired its head of banking in Denmark over exorbitant fees charged for an investment product.

More scandal at Danske Bank as interim Danish CEO fired
Danske Bank interim CEO Jesper Nielsen speaks at a public hearing at the Danish parliament in November 2018. Photo: Emil Gjerding Nielson / Reuters / Ritzau Scanpix

Denmark's biggest bank said that Jesper Nielsen, who had been serving as interim CEO until last month, was dismissed after 87,000 customers in the country were improperly charged for the “Flexinvest Fri” product.

“Danske Bank has found that customers who invested in the Flexinvest Fri product during a certain period paid fees that were too high,” the bank said in a statement.

Nielsen, who served as the bank's acting CEO between October 2018 and late May this year, “did not to a sufficient degree ensure that the Flexinvest Fri product was suitable for the bank's customers,” Danske chairman Karsten Dybvad said.

All those who invested in the product would receive compensation, which the bank expects to amount to 400 million Danish kroner (54 million euros).

The bank also said that the Danish Financial Supervisory Authority has been informed.

Danske's share price took a hit following the announcement, falling 3.4 percent on the Copenhagen stock market.

The bank is trying to recover after it became embroiled in criminal investigations in several countries over some 200 billion euros in transfers that passed through its Estonian branch between 2007 and 2015, involving some 15,000 foreign clients, many Russian.

Danske Bank said in February it was closing operations in Latvia, Lithuania and Russia.

READ ALSO: More on the Danske Bank money laundering scandal

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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