Swedbank cuts dividend as laundering probes drag on

Bloomberg

Swedbank AB acknowledged it will no longer be able to live up to its goal of paying out one of the highest dividend ratios in the Nordic finance industry.
Sweden’s oldest bank, which is dealing with the fallout of a money laundering scandal that has left it Europe’s worst performing financial stock this year, said it will now target paying out 50 percent of profits to shareholders, compared with 75 percent previously, according to a statement to the Stockholm exchange.
Shares in Swedbank fell as much as 6.6 percent in the Swedish capital after the report was published, bringing losses this year to about 30 percent.
Aside from an overall stricter regulatory climate, Swedbank pointed to “uncertainty” in relation to what it described as its “work on anti-money laundering.”
So far the scandal has had a limited effect on customers, with a small number of both retail and corporate clients exiting, Swedbank said. Bond investors haven’t been as nonchalant: The bank has held off from issuing a new type of bail-in-able debt amid wider spreads, and plans not to make its debut until after the summer.

Baltic Scandal
Sweden’s biggest mortgage bank this year became embroiled in a Baltic money laundering scandal that’s already cost the chief executive officer and chairman their jobs. Investigations are under way in Sweden, Estonia and the US and investor concerns about potential fines have wiped out more than a quarter of Swedbank’s market value this year.
That’s the worst performance of any major European bank over the period. The only lender that comes close is Danske Bank A/S, which is at the center of a $230 billion Estonian money laundering scandal.
In its second-quarter results, Swedbank said “shortcomings” had been identified as a result of its internal probe into laundering allegations.
“An extensive amount of information is being reviewed, covering Swedbank and its global network of branches, as well as relevant wholly owned subsidiaries,” it said. The bank is scrutinising customers and transactions covering the period 2007 through March 2019, it said.
Anders Karlsson, who has been acting CEO since Birgitte Bonnesen was fired at the end of March, said Swedbank’s new dividend policy reflects the fact that the bank is “in a very special situation” that requires it to have a “safety buffer.”
He also said it was too early to speculate on how the bank should prepare for a possible laundering fine.
“If there is a fine, when there is a fine, we will pay that fine, and exactly how that will pan out, it is still too early to say,” Karlsson said in an interview with Bloomberg Television.