Monday, October 26, 2020

ABN Amro flags possible money laundering fines in latest blow to shares

-

ABN Amro (ABNd.AS) said it faces possible money laundering fines, which combined with a gloomy interest rate outlook overshadowed an unexpected quarterly profit rise, knocking the Dutch bank’s shares on Wednesday.

The Dutch central bank (DNB) has ordered ABN to review all retail clients in the Netherlands for possible money laundering or other criminal activities, and warned that these investigations could lead to fines for the bank.

Banks have been forced to keep better track of client behavior after Dutch bank ING ING.AS was forced to pay a record $900 million fine in September for failing to spot criminal activities financed through its accounts.

Beyond the Netherlands, Denmark’s Danske Bank (DANSKE.CO) is involved in a money laundering scandal in Estonia, and Germany’s biggest, Deutsche Bank (DBKGn.DE), also faces money laundering allegations.

- Advertisement -

ABN said it took extra measures to increase customer due diligence at a cost of 114 million euros ($128 million) in the second quarter, and has now dedicated more than 1,000 employees to the fight against money laundering.

RelatedABN Amro second-quarter profit rises despite anti-money laundering costs

“Across the bank, we will take all remedial actions necessary to ensure full compliance with legislation”, Chief Executive Kees van Dijkhuizen said.

PROFIT BEAT A SIDE ISSUE

Despite the extra expenses, ABN reported a 1% rise in second-quarter net profit to 693 million euros.

- Advertisement -

That topped the 638 million euros analysts had expected, according to a company-compiled poll, and was up from 688 million a year earlier.

But ABN shares were down 3% to 16.06 euros at 0947 GMT, after having already lost 40% of their value since reaching a 28 euros peak on Jan. 12.

“The results are a side issue here”, KBC Securities analyst Jason Kalamboussis said, highlighting potential money laundering fines and further fallout from the investigations.

“Add a strong net interest income warning and a lower than expected interim dividend and this does not bode well for the next 12 months”, the analyst said.

ABN said low interest rates would put pressure on future earnings, as it now expected them to shave off 20 million euros of net interest income per quarter until the end of next year.

The bank had previously forecast a 10 million euro quarterly reduction in interest earnings due to low rates.

Lower interest income and rising regulatory costs have also made the bank’s target of reaching a cost-income ratio of 56-58% next year look “challenging”, Chief Financial Officer Clifford Abrahams said.

ABN kept its interim dividend in line with last year’s, but said it would consider increasing shareholder rewards as its capital buffer remained strong in the second quarter.

MUST READ

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Texas attorney general Ken Paxton fires top aide who accused him of bribery

Lacey Mase, one of the top aides who accused Texas Attorney General Ken Paxton of crimes including bribery and abuse of office, has been fired, she told The...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World

Advertisement
Advertisement

Latest News

This Week

Mozambique seeks prosecution of ex-Credit Suisse bankers implicated in debt scandal

Mozambique's Attorney General's Office said on Wednesday it will seek the extradition of three former Credit Suisse CSGN.S bankers implicated in a $2 billion debt scandal...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Two U.S. Navy service members get prison for defrauding military insurance program

Two U.S. Navy service members were sentenced in San Diego federal court Friday for their roles in an insurance fraud scheme that involved making false medical claims to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks