Danske Bank shares plunge after fresh money laundering claims

Danske and other Eropean banks have been caught up in major laundering scandals in recent years. (AFP pic)

COPENHAGEN: Shares in Denmark’s largest lender Danske Bank plunged on the Copenhagen Stock Exchange Tuesday, hit by fresh allegations of money laundering through its Estonian subsidiary.

The stock fall of over 6% cut the bank’s market value by 1.6 billion euros (over US$1.8 billion) within an hour of trading after the Financial Times reported that up to US$30 billion from Russia had flowed through Danske’s subsidiary in 2013 alone.

It was not clear how much of the amount was actually suspicious.

“We are not able to verify the specific information mentioned in the media,” Danske Bank said in a statement.

The bank has been at the centre of a financial scandal since Danish daily Berlingske last year claimed that it had been involved in the laundering of around US$3.9 billion of dirty money from several eastern European countries.

But after seeing bank statements dating back to 2007 and 2015 from 20 companies with accounts in Danske’s Estonian branch, the paper reported in early July that the figure was actually more than twice that.

Denmark’s state prosecutor for serious economic and international crime Morten Niels Jakobsen said in August that Danske Bank was being investigated and prosecutors would determine whether charges would be pressed.

Danske has launched an internal probe of its own regarding the allegations, and it plans to publish its findings before the end of the month.

It has also pledged to cooperate with the prosecutor’s investigation.

“As we have previously communicated, it is clear that the problems related to the portfolio were significantly larger than we originally anticipated when the investigations began,” the bank said.

Other major European banks have been ensnared in massive laundering scandals in recent years including France’s BNP Paribas and Germany’s Deutsche Bank.

The bank statements from 20 companies at Danske Bank are linked to a fraud case exposed by the Russian lawyer Sergei Magnitsky, who was jailed for revealing high-ranking Russian officials’ involvement in stealing massive tax payments from several companies, including the investment fund Hermitage Capital.

Magnitsky died in 2009 aged 37 after being held for a year and denied medical care.