Danske Bank believes it will cost about $2bn in fines to resolve one of the largest money-laundering scandals on record as it nears a solution with US and Danish authorities.
Denmark’s biggest bank said on Thursday that it would take an additional charge of DKr14bn ($1.9bn), taking the total provision to DKr15.5bn, as it hopes to reach agreement with the US Department of Justice, the US Securities and Exchange Commission and the Danish special crime unit by the end of the year.
“Danske Bank is now in a position to reliably estimate with a high degree of certainty the financial impact of a potential co-ordinated resolution with these authorities, at a total of DKr15.5bn,” the bank added.
It stressed that there was still “uncertainty” that a resolution could be realised but was working towards finishing it this year. It declined further comment.
Danske disclosed one of the biggest dirty money scandals on record in 2018 when it said that much of the €200bn of cash that flowed through its Estonian branch between 2007 and 2015 from countries including Russia was suspicious, though the bank has not stated how much was proved to be money laundering.
The Danish bank ousted both its chief executive and chair in the aftermath of the scandal, and lost its next chief executive after he was implicated in a separate money-laundering scandal.
Shares in Danske rose by 11 per cent on Thursday as investors hailed the lifting of the biggest uncertainty surrounding the bank. Its shares are still under half the level they were at in early 2018 before most of the revelations about the scale of the money laundering.
Danske is still subject to a number of civil lawsuits, and it warned on Thursday that it could face “material” damages from those cases.
Dozens of prominent shareholders are suing Thomas Borgen, its former chief executive for most of the time of the scandal, and a preliminary judgment is expected next month. Danish prosecutors last year dropped all charges against Borgen and other top executives over the affair.
Other Nordic banks have also faced money laundering problems, with the former chief executive of Swedbank, Sweden’s oldest bank, currently on trial over the issue. Swedbank is also under investigation by US authorities.
Danske revealed on Thursday that it now expected to make a net loss of “better than” DKr5.5bn this year, as opposed to its previous guidance of DKr10bn-12bn, due to the probable Estonian fines. In the third quarter, it swung from a net profit of DKr3.3bn a year earlier to a net loss of DKr13.8bn this year.