Estonia's FSA says Danske report shows 'serious shortcomings' at bank

COPENHAGEN (Reuters) - Estonia's Financial Supervision Authority (FSA) said a report by Danske Bank DANSKE.CO on Wednesday into laundering of Russian and ex-Soviet money through the Baltic country shows serious shortcomings in the bank's organization.

“The report describes serious shortcomings in the organization of Danske Bank, where risk-appetite and risk control were not in balance,” Kilvar Kessler, chairman of the Estonian FSA, said in a statement.

“We will study the report carefully and decide the next steps to be taken together with the Danish financial supervision authority,” he said.

Danske Bank's DANSKE.CO chief executive Thomas Borgen quit on Wednesday after an internal investigation showed a money laundering scandal involved 200 billion euros ($234 billion) which flowed through its Estonian branch between 2007 and 2015.

The Estonian FSA said it carried out thorough inspections of Danske’s local branch in 2014. IN 2015 it ordered Danske to rectify its flawed risk control organization and as a result the bank stopped serving non-resident customers.

Reporting by Jacob Gronholt-Pedersen; editing by Jason Neely