Friday, August 19, 2022

Danske in Settlement Talks With U.S., Denmark on Laundering Case


Danske Bank A/S is in initial talks with U.S. and Denmark authorities on ending a huge money laundering scandal as the lender seeks to a draw a line under one of the most tumultuous periods in its history.

Potential fines are likely “to be material,” the Copenhagen-based bank said, reiterating previous warnings. The lender said it will retain 2021 dividend payments due to be made alongside first-quarter results on April 29 in anticipation of possible payouts.

- Advertisement -

Danske revealed in 2018 that a large chunk of 200 billion euros ($210 billion) in transactions at its Estonian branch were suspicious. The findings, a result of an investigation by the bank, shocked Denmark and investors and eventually led to the ouster of most of the bank’s top management and set of criminal investigations in multiple countries.

“We’re approaching decision time,” Per Hansen, an investment economist at Nordnet Bank, said. How big fines will be is anyone’s guess, though they could reach as high as 10 billion kroner ($1.4 billion), he said. Bloomberg Intelligence estimates the lender may face a fine of about $1 billion from the U.S., based on profit metrics.

The shares gained as much as 2.6% in Copenhagen trading as investors speculated that the announcement is a sign that the long-running case, which has hammered the stock, may finally be drawing to a close.

- Advertisement -

Danske has struggled to rebuild its reputation and is grappling with rising compliance costs, while waiting for the outcome of those probes. CEO Carsten Egeriis was forced to cut 2023 profit targets just months after being named to the post in 2021.

The bank had said earlier this year that it would pay a 7.5 kroner-per-share dividend for 2021 over the course of the year, depending on its capital position and any resolution of the laundering case. The bank paid out a 2-krone dividend in connection with its annual general meeting last month.

The payment of the remaining dividend amount totals around $670 million. The bank has a payout rate of about 50% of net income, in keeping with Danske’s policy to return 40 to 60% of profits to shareholders.

On Thursday, Danske said again that it’s “not yet able to reliably estimate the timing, form of resolution or amount of a potential settlement or fines, which is likely to be material,” and as a consequence the board is retaining the dividend payment.

- Advertisement -


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



This Week