Deutsche Bank slumps on worry over role in Danske laundering

Bloomberg

Investors in Deutsche Bank AG have added the lender’s role in Danske Bank’s money laundering scandal to their growing list of worries.
A management shakeup, weak earnings and political turmoil saw Deutsche Bank shares hit multiple lows this year. Now, concerns about its involvement in Europe’s biggest money-laundering scandal are weighing on the stock after the key whistle-blower pointed a finger at the bank. German supervisor BaFin is also seeking more information on its relationship with Danske, a person briefed on the matter said.
“In the current environment, the slightest negative news is enough to make people leave risky assets, especially regarding sensitive topics like money laundering,” said Andreas Meyer, portfolio manager at Aramea Asset Management AG. Danske Bank A/S whistle-blower Howard Wilkinson, who stunned Danish lawmakers by saying he was offered hush money by the bank, estimated that $150 billion in suspect funds it handled was funnelled through a lender that he didn’t name. It was later identified by a person familiar with the matter as Deutsche Bank’s US unit.
An internal review conducted by Deutsche Bank came up with a similar, provisional figure for flows over the course of about nine years, a person briefed on the matter said. Deutsche Bank moves about $450 billion to $500 billion per day as a correspondent bank, the person said. Germany’s biggest bank processed payments for Danske Bank in Estonia, but ended the relationship in 2015 after it found suspicious activity, the lender said.
“We are neither aware of any investigation by BaFin nor have we received any formal requests for information,” a spokesman for Deutsche Bank said in an emailed statement.
Deutsche bank dropped as much as 6 percent in Frankfurt to 8.05 euros, the lowest in records compiled by Bloomberg, before closing at 8.15 euros. The stock has lost almost half its value this year. Deutsche Bank’s 1.75 billion-euro ($2 billion) 6 percent perpetual notes slum-ped 2.3 euro cents to about 89.5 in the biggest one-day decline since May, data compiled by Bloomberg show.