The chief executive of Denmark’s largest lender, Danske Bank, resigned on Wednesday as the institution said it was unable to determine how much money was laundered through its Estonian branch.
The announcements came days after the Wall Street Journal reported that Danish investigators were probing transactions of up to $150 billion “from companies with ties to Russia and the former Soviet Union” that transited Danske Bank’s Estonian branch between 2007 and 2015.
In early August, the state prosecutor’s office for serious economic and international crime said the bank was being investigated and prosecutors would decide whether to press charges.
The bank meanwhile tasked an independent legal firm to conduct an investigation of its own.
But the inquiry, which is drawing near to a close, was unable to provide an accurate estimate of suspicious transactions by non-resident customers in Danske Bank’s Estonian branch between 2007 and 2015.
Meanwhile, it exonerated chief executive Thomas Borgen of any direct responsibility in the case, which has thrown the Danish bank into a whirlwind of legal and media attention in recent weeks.
Borgen nonetheless said it was best for him to go.
“It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia,” he said in a statement.
“Even though the investigation conducted by the external law firm concludes that I have lived up to my legal obligations, I believe that it is best for all parties that I resign,” he added.
– ‘Do everything in their power’ –
As a way to clean up its tarnished image, Danske Bank said it would “donate the gross income from the customers in the period from 2007 to 2015, which is estimated at 1.5 billion kroner (201 million euros, $235 million), to an independent foundation which will be set up to support initiatives aimed at combating international financial crime, including money laundering, also in Denmark and Estonia.”
With that sum set to be booked in the third quarter, the bank had to revise downwards its earnings outlook for the whole of 2018, forecasting a net profit of 16-17 billion kroner instead of the previously anticipated 18 to 20 billion.
The financial pain from the case was already being felt on the trading floor: shares in Danske Bank plunged more than 7.8 percent in the Copenhagen Stock Exchange before noon local time.
Lars Krull, an economics professor at Aalborg University, told AFP he believed the bank would do whatever it takes to rehabilitate its reputation.
“I think they (Danske Bank) will do everything in their power to be robust in handling this case,” he said.
But Mikkel Emil Jensen, an analyst at Sydbank, told Ritzau news agency that it may be a long time yet before life at Danske goes back to normal.
“We do not know the extent of the money laundering problem which means the uncertainty can last. The fear of receiving heavy fines is still there,” he said.
The money laundering allegations are linked to a fraud case exposed by the Russian lawyer Sergei Magnitsky, who was jailed in Russia after he revealed the involvement of several high-ranking Russian officials in stealing massive tax payments from several companies.
Magnitsky died in 2009 aged 37 after being held in a Russian jail for a year, where he was denied medical care.
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