Danske Bank announced the departure of its CEO on Wednesday following a money laundering scandal in its Estonian subsidiary between 2007 and 2015. While the bank admits it is unable to put a number on the amount of money involved, it said a total of about 200 billion euros flowed through the Estonian unit at the centre of the investigation during the period in question.
“It is obvious that Danske Bank has not lived up to its responsibilities in the case of possible money laundering in Estonia,” said managing director Thomas Borgen in a press release. “It has been clear to me for some time that resigning would be the right thing to do, but I have held off the decision, because I have felt a responsibility for seeing the bank through this difficult period towards presentation of the investigations,” Borgen said.
In August, the Danish public prosecutor’s office opened a criminal investigation into Danske Bank following accusations that it had been guilty of money laundering via its Estonian subsidiary.
The bank’s internal investigation involved auditing the accounts of some 6,200 of its 15,000 customers “Overall, we expect that a significant portion of the payments are suspicious,” the bank said. Customers of the Estonian branch came from Russia, Azerbaijan, Ukraine and several other former Soviet Union states.
The bank has therefore announced that it will “return the gross margin from customers for the period 2007-2015, estimated at 1.5 billion Danish kroner (201 million euros), to an independent foundation that will be created to support initiatives to combat international financial crime, including money laundering, in Denmark and Estonia.”
This sum, levied in the third quarter of 2018, has forced the group to downgrade its forecasts for 2018, with a net profit of 16-17 billion crowns against the 18-20 billion previously announced.
Mr Borgen, who was promoted to run Denmark’s biggest bank in 2013, will continue in his job until a replacement is appointed, Copenhagen-based Danske said on Wednesday. The bank didn’t say how long that might take.