Danske Bank apologises for scandal in ‘challenging year’

Danske Bank has again apologised over its failure to monitor around €200bn in suspicious transactions that went through its Estonia branch over many years, as the lender posted a sharply lower net profit of 15bn Danish krone (€2bn) for 2018, in what it described as a “challenging year”.

The Danish lender —which is a significant mortgage and business lender in the North and is running down a once substantial mortgage operation in the Republic — has been enveloped by the money laundering scandal after admitting to regulators and government investigators over its failings to monitor and report that billions of euro transactions passed through its Estonian bank into Europe from Russia and other former Soviet republics.

Criminal investigations continue in a number of countries into what Danske and other international banks knew about the suspicious transactions.

“It is clear that we have failed to live up to our responsibility in this matter, not only in not being able to efficiently prevent suspicious activities and transactions from taking place in Estonia, but also in our inability to understand and address the issues efficiently as they came to light,” Danske said. Capital reserves remained strong, it said.

“We are determined to get to the bottom of the matter and to learn from it so that we can take all necessary steps to prevent something similar from happening again,” it said.

In the North, it said its pre-tax tax profit fell 41% to 744m krone last year because write-backs and other one-off gains had boosted profit levels in 2017. It had a total income of 1.97bn kroner, up 1% from 2017, from its northern operation.

In 2004, just years before the crash, Danske bought Northern Bank and National Irish Bank. Much of its former substantial mortgage activities in the Republic are now housed in a “non-core” operation, which now also includes non-core lending in Lithuania, Estonia, and Latvia. “The winding up of the non-core portfolios is proceeding according to plan,” it said.

In the North, it said it had taken a charge in the event of the UK crashing out of the EU and the “probability of a hard Brexit has been factored into the forward-looking macroeconomic scenarios”.

However, it said: “While uncertainty remains around Brexit, customer activity levels remained healthy.

“Our business continued to perform well, supported by ongoing improvements to our mortgage finance proposition, including new products and revised processes, as well as further strengthening of business relations,” the bank said.