Thursday, October 29, 2020

Anti-money-laundering rules weigh on Nordic banks


Efforts to improve anti-money-laundering controls continue to weigh on the financial results of Nordic banks, which have faced allegations in recent months of moving dirty money.

The region’s largest lenders — Swedbank AB, Nordea Bank ABP and Danske Bank A/S — said this week that investments in new compliance systems and staff members have taken a bite out of quarterly profits. The banks have been swept up in the wave of crises over alleged compliance lapses that have rocked Europe’s banking sector.

The uptick in compliance spending comes at a tricky time, as lenders across the continent face an outlook for lower interest rates and uncertainty surrounding the U.K.’s planned exit from the European Union.

“The banks in my view that will be successful in the future are the banks that tackle compliance issues head on,” said Chris Vogelzang, Danske’s chief executive, during the bank’s quarterly call Thursday.

- Advertisement -

Mr. Vogelzang took the helm at Danske in May. Danske revealed last September that more than $230 billion in suspicious funds, mostly from Russia, flowed through a small branch in Estonia. The bank faces a series of probes related to those transactions.

Investments in additional compliance staff and technology pushed quarterly expenses higher, and will continue to do so in the months ahead, executives said.

Read MoreDanske Bank picks ex-ABN banker as CEO to rebuild trust after money laundering scandal

Danske’s operating costs during the first six months of 2019 rose 12% from a year earlier, to 12.8 billion Danish kroner ($1.9 billion).

- Advertisement -

Its core banking business will continue to face pressure while the “overhang of regulatory investigations persists,” Richard Smith, an analyst with Keefe, Bruyette & Woods, said in a research note to clients Thursday. Second-quarter profit at the Copenhagen lender slid 7% from a year earlier.

Nordea said Thursday it plans to review its financial targets, including its dividend policy, given the pressures the Helsinki bank faces on a number of fronts, including the cost of improving its compliance systems.

Nordea’s Danish headquarters were searched last month by the Danish Prosecution Service as part of a probe, launched in 2015, into possible money-laundering violations.

Nordea’s spending on compliance systems has recently stabilized, after years of ramping up, CEO Casper von Koskull said during an earnings call Thursday. The bank, however, is looking at ways to improve compliance efficiency through automation.

“We were behind the game in the beginning,” Mr. von Koskull said. “But now I think we are partly ahead of the game, at least compared to some.”

Swedbank — whose CEO was ousted in March after police raided its headquarters as part of a money-laundering probe — said Wednesday that expenses rose 12% from a year earlier, mostly from investments in compliance, as well as an investigation by an external law firm into previous lapses.

Anders Karlsson, interim CEO of the Stockholm lender, said the bank has identified weaknesses in its processes for screening transactions for criminal activity and conducting due-diligence investigations on its customers.

“I am not in a position, and I don’t think any other CEO of any bank would be in a position, to say that everything looks dandy today,” he said during an earnings call Wednesday.


Nigerian court declines to issue international arrest warrant for fugitive ex-Petroleum Minister in corruption case

The Abuja Division of the Federal High Court, on Wednesday, refused an application by the Economic and Financial Crimes Commission, EFCC, for an arrest...

South Korea’s former Vice Justice Minister sentenced to jail for bribery and sexual favors

Former Vice Justice Minister Kim Hak-eui, the figure at the center of one of Korea’s biggest political sex scandals, was placed under pretrial detention...

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 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...

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...

Subscribe For More

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


Latest News

This Week

Former Jacksonville City Council members set for sentencing in fraud case

Former Jacksonville City Council members Katrina Brown and Reggie Brown are scheduled to be in federal court Tuesday to begin a hearing on their...

Former Malawi minister sentenced to six years in prison over passport corruption scandal

A court in Malawi’s capital Lilongwe on Thursday sentenced a former home minister to six years in prison after he was found guilty in...

Former Harris County deputy constable pleads guilty to transporting drug money and heroin

A former Harris County deputy constable and her husband pleaded guilty Wednesday to charges of conspiracy to possess with intent to distribute heroin, according...

Former President of nuclear transportation company gets prison in scheme to bribe Russian official

A Maryland businessman convicted of plotting to pay a Russian official more than $1.5 million in bribes to get lucrative contracts for transporting uranium...

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