Danske growth machine at risk over laundering case

Bloomberg

Danske Bank A/S’s money-laundering scandal threatens to undermine its growth engine. The lender’s Nordic banking operation, which encom- passes Norway, Sweden and Finland, was the only core unit of five to report higher profit in the third quarter.
But now, some customers in the biggest Nordic economy may be reconsidering their loyalty to the bank, according to Berit Behring, head of Swedish operations at Danske.
The Nordic business plan was a brainchild of former Chief Executive Officer Thomas Borgen, who wanted to make expansion in the region a cornerstone of Danske’s overall growth strategy. As recently as November, Danske proudly pointed to a 13 percent increase in lending in the Swedish retail market in the first nine months of last year.
But Behring says clients are now expressing concerns as they await the outcome of multiple criminal investigations into Danske amid a $230 billion dirty money scandal. The result of those probes may determine how willing clients are to stick with the bank, she said in an interview in Stockholm.
“Unfortunately it has damaged the confidence in the market for us even here in Sweden,” Behring said. What’s more, the scandal has triggered a cut in Danske’s sustainability ratings, which has “affected behavior” among institutional clients that make decisions based on those ratings, she said.

WAITING FOR DETAILS
Behring declined to elaborate, and said markets will have to wait until Danske reports its fourth-quarter results on February 1 to learn more.
Danske has admitted that vast amounts of money from suspicious clients in the for-mer Soviet republics flowed through a branch in Estonia and into the West until as recently as 2015.
The US Justice Department is investigating the case, while Danish authorities have already brought preliminary charges against the bank. In Estonia, 10 former Danske employees have been apprehended.

Danske won’t let go Swedish ambitions
Bloomberg

Danske Bank A/S has no intention to let its role at the center of Europe’s biggest money laundering scandal affect its growth in the Swedish mortgage market.
The Swedish unit of Denmark’s biggest bank has spent the past two years grabbing about 8 percent of new mortgages in Scandinavia’s biggest economy. That’s roughly double its overall market share on Swedish home loans. Berit Behring, the head of Danske in Sweden, says it can continue to grow at that pace.
“We’ve been tracking credit quality closely, especially as we have been bearish on housing prices in Sweden, and we’re comfortable with the risk that we’re taking,” Behring said in an interview in Stockholm on January 8. “The main thing we focus on is what kind of credit quality we get into our books, and right now we can continue to grow at that rate,” she said. “That could of course change if housing prices fall.”