Danske Bank boss abandons more than $ 234 billion in money laundering scandals

COPENHAGEN (Reuters) – Danske Bank (DANSKE.COChief Executive Thomas Borgen resigned on Wednesday after an investigation revealed payments totaling 200 billion euros ($ 234 billion) through his Estonian agency, many of which were suspected by the bank.

The Danish bank detailed compliance and control failures as increasing calls to a new EU watchdog to clamp down on financial crime after a series of money laundering scandals which attracted the attention of US authorities.

"Even though I have been personally authorized from a legal point of view, I have the ultimate responsibility. There is no doubt that we, as an organization, have failed in this situation and have not lived up to expectations, "Borgen said at a press conference.

Borgen, 54, was responsible for Danske Bank's international operations, including Estonia, between 2009 and 2012.

Danske Bank said in a summary of a report covering around 15,000 customers and 9.5 million payments between 2007 and 2015 that Borgen, President Ole Andersen and the board of directors had " not violate their legal obligations ".

Andersen said the bank had assessed whether it had violated US laws, a major concern for shareholders, but declined to share its conclusion at a press conference.

The portfolio of Estonian non-residents included clients from Russia, Azerbaijan, Ukraine and other ex-Soviet states. The investigation, which began a year ago after the publication of the newspaper Berlingske, revealed allegations of professional misconduct.

Danske Bank, whose shares have already fallen by nearly 8% during the morning session, reported that some 6,200 clients had been examined to date and that a significant portion of the payments were suspicious.

The stock value of Danske Bank had doubled since Borgen took office as CEO in 2013 until July 2017, but lost more than one-third as a result of allegations of "bad debt". suspicious transactions and Denmark and Estonia opened criminal investigations.

The bank said it had taken measures, including "warnings, dismissals, loss of premiums and reports to the authorities" against current and former staff, as well as overhauling the systems that contributed to the failures.

To indicate the potential costs of such a failure, the Dutch bank ING (INGA.AS) agreed to pay 775 million euros ($ 900 million) this month after admitting that criminals were laundering money through his accounts.

And earlier this year, US authorities accused Latvia's ABLV of covering money laundering, which prevented the bank from obtaining US dollar financing and its rapid collapse.

While Danske does not have a banking license in the United States, banning the corresponding US banks from attacking them would amount to excluding them from the global financial network.

GRAPHIC: Danske Bank Stock Price Performance – reut.rs/2plB6Om

SERIOUS DIFFICULT

The report revealed that Danske Bank failed to take appropriate action in 2007 when it was criticized by the Estonian regulator and received information from its Danish counterpart indicating "criminal activities such as money laundering".

And when a whistleblower raised issues at the Estonian subsidiary in early 2014, the allegations were not properly reviewed and were not shared with the commission, said Danske, adding that the measures to control his activities were insufficient.

Danske Bank also stated that the Estonian subsidiary had not used its anti-money laundering procedures because it had decided not to migrate its Baltic banking activities to the bank's IT platform, as this would have cost too expensive.

"The report describes serious shortcomings in the organization of Danske Bank, where the risk appetite and risk control were not balanced," said the head of the financial regulation Estonian, Kilvar Kessler, in a statement .

Danske Bank, which reduced its annual net profit forecast to 16-17 billion Danish kroner, compared to 18-20 billion previously, has managed to overcome previous trauma.

The government had to intervene and ensure that it could pay its debt in short-term dollars when international markets froze in 2008 and in 2012 it was criticized for an advertising campaign aimed at improving its image, borrowing symbols related to the anti-Wall Street movement.

Prior to the money-laundering scandal, Borgen had succeeded in improving the bank's image and profits by reducing costs, focusing on richer clients and developing in Sweden and Norway to compete with Nordic Nordic Large Bank (NDA.ST).

(1 dollar = 0.8553 euros)