* Head of Business Banking Lars Morch resigns
* Estonia branch should have been probed earlier -chairman
* Morch to be released from his duties as soon as possible (adds Danske Bank chairman comments)
By Teis Jensen and Jacob Gronholt-Pedersen
COPENHAGEN, April 5 (Reuters) - A senior executive quit Danske Bank on Thursday after it concluded there should have been an earlier and deeper inquiry into alleged money laundering at its Estonian branch.
The departure of Lars Morch, who has been responsible for the Baltic operations of Denmark’s biggest bank since 2012, comes during an internal investigation into the Estonian operations which is due to be completed by September.
Morch could not be reached for comment, while Danske Bank Chairman Ole Andersen said he respected his decision to resign, adding it was clear the bank should have undertaken more thorough investigations earlier.
The case is one of several highlighting alleged money laundering in the Baltic states as authorities clamp down on conduits for illicit funds linked to Russia.
“We now have a bit more clarity from the ongoing investigations. And even though Lars contributed to a number of initiatives in 2014 to correct the situation, we can conclude today that it wasn’t enough,” Andersen said in an interview.
The board has “over the last few weeks” discussed the situation with Morch, who will be released from his duties as soon as possible and formally end his employment at the end of October 2019. Morch, who had been with the bank for 19 years, will continue to be paid in the meantime.
Danske Bank had been criticized for failing to take appropriate measures after a whistleblower who, according to reports in Denmark’s Berlingske and Britain’s Guardian, alerted it in December 2013 to money laundering linked to Russia through its Estonian branch.
Latvian bank ABLV was closed in February after U.S. allegations that it was serving as a conduit for illicit funds.
The bank’s former management denies any wrongdoing and Latvia has moved to ban shell companies, often used in money laundering.
Meanwhile, the European Central Bank last month revoked the licence of small Estonian bank Versobank over failures to remedy regulatory breaches in areas such as money laundering.
The investigation by Danske Bank had led to questions over the position of Chief Executive Thomas Borgen, who headed the International Banking unit, which includes the Baltic operation, for two years before Morch assumed control.
Borgen, who has led a turnaround at the banking group since taking charge in 2013, declined to comment on the matter, a Danske Bank spokesman said.
When asked if this chapter of the inquiry had been closed with Morch’s departure, Andersen said: “I wish I could say yes.”
“But it would be terrible if I now said this case was finished, and the investigations later show conditions which we must relate to,” he added.
Leonhardt Pihl, chief executive of the Danish Shareholders Association, a lobby group for private investors, said further departures would be damaging in the short term. “But I think there’s enough talented people inside Danske Bank to find new, good managers to run the bank,” he added.
Danske Bank shares closed slightly below the broader market on Thursday and have shed more than 10 percent of their value since late February, when Estonia’s financial regulator said it would open an investigation into the bank. (Reporting by Teis Jensen Additional reporting by David Mardiste in Tallinn, Editing by Jacob Gronholt-Pedersen/David Holmes/Alexander Smith)