Trust in Danske Bank has collapsed, says its new chief executive

COPENHAGEN (Reuters) - Trust in Danske Bank DANSKE.CO has collapsed amid its involvement in a damaging money laundering scandal said the bank's Chief Executive Chris Vogelzang on Wednesday, as he vowed to strengthen the bank's defense.

FILE PHOTO: Danske Bank sign is seen at the bank's Estonian branch in Tallinn, Estonia August 3, 2018. REUTERS/Ints Kalnins/File Photo

“At Danske Bank we talk a lot about rebuilding trust because our trust has collapsed,” Vogelzang said at a banking event in Copenhagen organized by business daily Borsen.

The high level of trust in Denmark, which enjoys a reputation as being one of the least corrupt nations, meant that there had been fewer incentives to control risks, which led to problems outside the Nordic region, Vogelzang said.

According to the ex-ABN Amro banker, efforts to combat money laundering are not advanced in Denmark and across the Nordics.

“Some of the discussions we are having now here about AML (anti-money laundering) and conduct were already very much on the table 4-5 years ago in some other countries.”

As a result, he said, nine out of 10 people in the top compliance team are now from outside Denmark.

Danske Bank is under investigation in several countries including the United States for payments totaling 200 billion euros ($220 billion) through its small branch in Estonia between 2007 and 2015, many of which the bank said were suspicious.

“Thieves and criminals will rather go to the weak spots than to the stronger spots. And ... my bank had weakened defenses. It was not bad faith, we just weren’t organized,” he said.

Trust in the bank has been further dented after a scandal, in which it failed to inform customers that it expected a poor performance from an investment product called Flexinvest Fri and continued to sell the product after raising fees associated with it.

“We will find things, I’m sure. Flexinvest is one, but we’ll find more,” said Vogelzang, who took over on June 1.

Reporting by Jacob Grønholt-Pedersen; writing by Stine Jacobsen; editing by Louise Heavens