The closure of Danske Bank in Estonia should not have any substantial economic impact, according to the Bank of Estonia, the country's central bank.
The Financial Supervisory Authority (FSA) announced on Tuesday that Danske has eight months in which to close its Estonian branch, and make provision to minimise disruption for the thousands of customers who have either deposits or loans with the bank.
This followed investigations into the banks activities and the revelation that €200 billion in potentially illicit funds passed via the single branch in Tallinn between 2007 and 2015.
However, it was precisely concerns about the bank dating back to 2015, including those raised by the FSA, which meant that it stopped accepting new private customers at around that time, in addition to halting any more non-residents opening accounts at the branch.
Bank long since downsized its high street functions
Thus, since the bank had stopped providing services to private individuals and local businesses some time ago, its closure will not have a serious impact, the central bank said.
After 2015 the volume of deposits, loans, card payments and other high street banking operations at Danske Estonia started to drop rapidly, accelerated from 2017 when the bank stopped being a provider of what the Bank of Estonia called ''vital services'', in Estonia at least.
From April 2018, Danske announced it would no longer open new accounts for local companies in the Baltic states would start gradually to withdraw other services offered to local clients.
This meant essentially Danske Bank was a strictly business clients outfit, maintaining operations in Estonia which served only the subsidiaries of its clients either in the Nordic countries, or international corporations strongly represented in those countries.
Soon afterwards, the full extent of the possible sums potentially laundered via Danske became clearer, from a few billion, to the current figure of €200 billion, by September 2018.
To put the figure into perspective, the amount potentially laundered, albeit over a period of around eight years, is close to the purchasing power parity GDP for Danske's parent nation of Denmark in 2017 (at around €253.3 billion - Estonia's was €36.7 billion in the same year).
"The FSA has in recent years taken several decisive steps, extraordinary by European standards, to counter any banking activities in Estonia that involve heightened money laundering risks," said Bank of Estonia deputy governor Madis Müller.
Mr Müller is also a member of the FSA supervisory board.
At the end of 2018, Danske had around 14,700 depositors in Estonia, and 12,300 borrowers. To what extent these overlapped is not reported.
Danske announced on Tuesday that not only did it agree with the Estonian FSA ruling, but that it would be pulling out of the Baltic States and the Russian Federation altogether, save for some back-office functions retained in Lithuania.
The European Banking Authority (EBA), the EU's own financial regulatory watchdog, has said it will investigate the Estonian FSA and its Danish counterpart for their compliance with EU law in handling the Danske case; this is not the first time in recent years this has happened - the EBA investigated the Maltese financial regulator in 2018, also in the context of the handling of a private bank, issuing recommendations in complying with EU law in the aftermath.
Editor: Andrew Whyte