Danske Bank sets aside nearly €2 billion for expected fines

Danske Bank, which is under investigation by Danish and US authorities, said Thursday it had set aside an additional 14 billion kroner (1.9 billion euros) to cover expected fines related to massive suspected money laundering via its Estonian branch.

Danske Bank sets aside nearly €2 billion for expected fines
Bicycles outside a Danske Bank branch in Copenhagen. File photo: Andrew Kelly/Reuters/Ritzau Scanpix

“The discussions with US and Danish authorities related to the Estonia matter are now at a stage where Danske Bank can reliably estimate the total financial impact of a potential coordinated resolution amounting to a total of DKK 15.5 billion” or $2.1 billion, the bank’s chief executive Carsten Egeriis said in a statement.

“Our dialogue with the authorities is ongoing, and while there is still uncertainty that a resolution will be reached, we hope that a resolution will be concluded before the end of this year,” he added.

The bank had already set aside 1.5 billion kroner in 2018 when the scandal first emerged.

An investigation carried out by an outside law firm for the bank found that it could not account for the origin of more than $220 billion that flowed through its Estonian branch from 2007 to 2015, much of which was suspected to have come from Russia.

Danske Bank’s shares soared more than 10 percent after the announcement, the first time it has provided any estimate of the fines it may face.

Copenhagen City Court is meanwhile currently hearing a money laundering case related to the bank’s disgraced branch in Estonian capital Tallinn.

In the case, a Danish-Russian woman is accused of laundering over 29 billion kroner through the bank in cooperation with a Lithuanian national, by using shell companies in Copenhagen.

The now-closed Tallinn Danske Bank branch was at the centre of the major money laundering scandal in 2018.

READ ALSO: Danish court jails woman in 4 billion euro money laundering case

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Danish bank posts loss after US money laundering fine

Danske Bank reported heavy losses for 2022 on Thursday as Denmark's biggest lender was hit by huge fines in the United States and at home over money laundering.

Danish bank posts loss after US money laundering fine

The bank posted a loss of 5.1 billion Danish kroner ($753 billion) last year.

But it expects to bounce back into the green in 2023 as it forecast a net profit in the range of 15-17 billion kroner for the year.

The bank said 2022 was “an unusual year” with market volatility, soaring inflation following Russia’s invasion of Ukraine and a “deteriorating macroeconomic outlook”.

Danske Bank also set aside nearly 1.8 billion euros in provisions for legal cases related to a money laundering scandal involving its branch in Estonia.

In December, the bank pleaded guilty to defrauding American banks via its Estonian branch in order to sneak money from criminals in Russia and elsewhere into the US financial system.

Danske Bank forfeited $2 billion as part of the plea agreement.

The next day, it was fined 3.5 billion kroner by the Danish financial watchdog.

Danish authorities also seized 1.25 billion kroner in profits from transactions in the Estonian branch, which has since shut down.