Danske Bank may have to pay a penalty of more than €600 million following allegations it became a major hub for money laundering in Europe, Bloomberg said citing analysts on Wednesday.
According to Bloomberg, while there are no charges or convictions in the matter thus far, analysts are already speculating as to how large a fine Danske Bank may have to pay for enabling money laundering through its Estonian branch.
A potential penalty could be as high as €4.7 billion or as low as €300 million, with estimates averaging at approximately €600 million, based on numbers submitted by five analysts. At least two of the analysts told Bloomberg that it was possible Danske may end up avoiding a fine altogether.
In any event, the bank's share plunge reflects a worse fate than anyone is predicting, with a sixth analyst pointing out that investors have already priced in as much as €5 billion in potential fines.
The Danish regulator has already ordered Danske to hold an additional five billion kroner, or €670 million, in regulatory capital in response to laundering allegations.
It has been claimed that Danske's Estonian operations became a laundromat for more than €7 billion channeled into Europe from Azerbaijan, Russia and Moldova between 2007 and 2015, according to Bill Browder, the fund manager who is leading a global campaign against the Kremlin over corruption and human rights abuses.
Browder, who is co-founder and chief executive officer of Hermitage Capital, has said he is preparing a complaint to the Danish Public Prosecutor.
"At this point, there's now an international scandal around the conduct of the bank," Browder said in a phone interview on Monday. He also plans to file a complaint in Estonia.
Last September, Danske Bank announced it had expanded its ongoing investigation into the customers and transactions of its Estonian branch from 2007-2015. The bank hired Jens Madsen, the former head of Denmark's intelligence agency and fraud squad, to assist the bank in its efforts to investigate a possible case of money laundering in the bank's Estonian branch.
In October 2017, the bank was placed under investigation by the High Court of Paris in relation to suspicions of money laundering concerning transactions carried out by customers of Danske Bank Estonia from 2008 to 2011. According to Danish daily Berlingske, the investigation launched by French authorities into the activities of the Estonian branch of Danske Bank was linked to the case of Russian lawyer Sergei Magnitsky.
Danske Bank at the end of April 2018 announced a gradual exit of the Baltic market as it stops serving local business and private banking customers in the Baltic countries. The group said that the move was in line with their strategy to focus exclusively on supporting subsidiaries of Nordic customers and global corporates "with a significant Nordic footprint."
Editor: Aili Vahtla