September 10, 2018 / 4:55 PM / 2 months ago

UPDATE 1-Danske Bank to publish results of Estonia money laundering case on Sept 19

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COPENHAGEN, Sept 10 (Reuters) - Danske Bank will on Sept. 19 publish the findings of an investigation into past activities at its Estonian branch that could be one of the biggest money-laundering scandals in Europe.

The results of the probe will be scrutinised by investors and the wider financial community, and will also help determine the outcome of current criminal investigations in both Denmark and Estonia.

Danske Bank’s non-resident portfolio at the Estonian branch has been at the centre of allegations that the bank had flawed money laundering controls from 2007 to 2015.

Reports suggest the money-laundering scandal could involve as much as $150 billion worth of transactions.

Danske Bank is facing its biggest setback yet, even after the bank in 2012 was criticised for an advertising campaign that sought to improve its image, borrowing symbols linked to the anti-establishment movement Occupy Wall Street.

Since then, Chief Executive Thomas Borgen, who took over in 2013, has managed to improve the bank’s image and earnings in part by shifting its focus to wealthier clients.

But now, Denmark’s biggest lender and an integral part of the Nordic country’s economy is seeing its credibility drop and could face sizeable fines.

The case has also put pressure on Borgen, who was in charge of international banking, including Estonia, from 2009 to 2012.

Shares in Danske have shed 30 percent of their value in the last six months and another 3 percent on Monday to a 26-month low.

The bank launched the investigation a year ago after newspaper Berlingske revealed alleged misconduct at the branch. The probe has been lead by Danish law firm Bruun & Hjejle.

“The investigations into the portfolio of non-resident customers in Estonia are being finalised, and conclusions are expected to be shared on 19 September,” a Danske spokesman said in a statement.

The bank has previously admitted to flaws in its anti-money laundering controls in Estonia.

It has said it has a common interest with the authorities in “getting to the bottom of things”, but left-wing politicians have uttered misgivings about the validity of an investigation launched by a suspect of serious crimes.

Estimates for potential fines for Danske Bank as a result of this case vary widely, according to six analysts who cover the stock. While one of them predicted that the bank would pay no legal penalty, others expected it to face more than $1 billion in fines from the authorities in Denmark and Estonia.

Public confidence in the bank has dropped this year.

The percentage of Danes who find the bank credible has fallen to 58 percent this year from 70-75 percent over the previous two years, according to new figures from polling firm Voxmeter shared with Reuters. ($1 = 6.4285 Danish crowns) (Reporting by Jacob Gronholt-Pedersen and Teis Jensen; Editing by Kirsten Donovan)

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