Danske ‘has €2.4bn buffer’ amid laundering probe

Danske ‘has €2.4bn buffer’ amid laundering probe

Danske Bank has built a capital buffer of up to €2.4bn to absorb potential fines as it deals with the fallout of its role in one of Europe’s worst ever money laundering scandals.

Acting chief executive Jesper Nielsen says that the amount significantly exceeds what Denmark’s regulator has ordered Danske to hold in connection with the laundering case.

Speaking in an interview, he also said the bank is continuing to build that reserve. Nielsen said that’s because the bank wants to “basically do what it takes to create the confidence needed to show we are strong and well capitalised”.

Danske is being investigated by the US Justice Department after acknowledging its Estonian operations were a path in Europe for illicit funds from Russia.

The case spans at least nine years into 2015 with about €203bn under scrutiny. Denmark’s regulator told Danske to hold about €1.3bn in capital to prepare for potential penalties, prompting the bank to shelve its share buyback programme.

Denmark’s FSA this year ordered Danske to add 10bn kroner (€1.3bn) to its Pillar 2 capital requirement to deal with the fallout of the laundering scandal.

Nielsen said the bank now has 15bn kroner to 18bn kroner, depending on how it’s counted.

Investor anxiety about how much Danske may be facing in fines has driven the bank’s share price down by about 45%, wiping roughly €14bn off its market value.

Nielsen, who became acting CEO after Thomas Borgen was forced out over of his role in the laundering scandal, says Danske will keep setting aside profits to build capital.

However, the lender intends to maintain its dividend policy, he said in Copenhagen. Denmark has already brought preliminary charges against Danske.

Bloomberg

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