Danske Bank expects money laundering case to be resolved this year

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It is a “fair assumption” that the US and Danish investigations into the Danske Bank A/S money laundering case will be resolved this year, according to CEO Carsten Egeriis.

Danske, Denmark’s largest bank by assets, is in talks with US and Danish authorities over its involvement in a money laundering scandal in Estonia. A settlement or fine is “likely to be significant,” according to Danske.

The lender withheld dividends for the second consecutive quarter to ensure it has sufficient capital flexibility to deal with the results of the investigations.

While Danske “can’t say anything with any conviction about the timing at this point”, according to Egeriis, the bank has in its cost target for 2023 assumed that a resolution would be found in 2022.

“We announced that discussions had started at the end of April and therefore we thought it was a fair assumption to think that it could be done this year,” Egeriis in a July 22 earnings call.

Danske expects spending to fall to 23.5 billion crowns in 2023, down 8% from the 25.5 billion crowns the bank has forecast in 2022. This will be partly due to a drop of 400 million crowns. crowns for legal costs related to the Estonia case. A further 800 million crowns in savings will come from the final resolution of his debt collection case.

Danske said earlier this year that he had passed the peak of costs related to financial crime and indicated that expenditure for the year 2022 would reach 25 billion crowns. The bank revised that estimate to 25.5 billion crowns earlier in July due to the high and sustained costs of resolving its old cases.

The US Department of Justice, the US SEC and the Danish Special Crime Unit are among the authorities investigating Danske Bank for its involvement in a money laundering scandal in Estonia. Up to 200 billion euros of non-resident money passed through the lender’s Estonian branch from 2007 to 2015, a “significant” part of which was found to be suspicious, according to an internal investigation in 2018.

Danske is also being investigated by Estonian and French authorities as part of the Estonia case, according to the Danske Earnings Report.

As of July 21, US$1 equaled 7.30 Danish kroner.

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