STOCKHOLM (Reuters) - Sweden’s and Estonia’s financial watchdogs have opened a joint investigation following a media report linking Swedbank to a Baltic money laundering scandal involving Danske Bank, they said on Thursday.
Swedbank said separately it had launched an external review, after some of its top investors urged it to ensure the allegations were independently examined.
A television report on Sweden’s public broadcaster SVT on Wednesday alleged that money laundering could have occurred in relation to at least 40 billion Swedish crowns ($4.30 billion) transferred between Baltics accounts at Swedbank and Danske between 2007 and 2015.
Danske is being investigated in five countries over some 200 billion euros ($226 billion) of suspicious payments from Russia, ex-Soviet states and elsewhere that were found to have flowed through its Estonian branch.
The Financial Supervisory Authorities of Estonia and Sweden said in a joint statement the money-laundering report was very serious.
“The Estonian and Swedish FSAs have today agreed to initiate a joint investigation with the purpose of closely examining the information reported by SVT.”
They said the Bank of Lithuania had also agreed to participate. Lithuania’s financial regulator said it would separately examine Swedbank’s local operations.
Latvia’s financial regulator said it had fined Swedbank in 2016 for not paying “sufficient attention” to transactions that “had no apparent economic or visible lawful purpose”. The regulator said Swedbank had failed at the time to obtain documents and data on the customers.
Swedbank said it had appointed audit firm EY to carry out an external investigation and to report the results to its board of directors before its annual general meeting on March 28.
“Preventing and averting money laundering is one of the bank’s most important responsibilities,” Swedbank CEO Birgitte Bonnesen said in a statement.
Bonnesen had said on Wednesday she was confident about the bank’s actions to prevent money laundering but could not promise that nothing had slipped through the net.
Swedbank shares fell almost 14 percent on Wednesday in their biggest intraday fall since the financial crisis. They closed down 9.3 percent on Thursday to 165.05 Swedish crowns, and having lost more than a fifth of their value in two days.
Swedbank is the largest bank in the Baltics with around 3.3 million retail customers and around 300,000 corporate customers. The Baltics accounted for just under a fifth of Swedbank’s revenue in 2018.
Analysts have highlighted the risk to Swedbank of a potential criminal complaint from Bill Browder, once one of the biggest foreign money managers in Russia, who is now campaigning to expose corruption.
Browder, founder and CEO of investment fund Hermitage Capital Management, told Reuters on Thursday he intended to file a criminal complaint against Swedbank with Swedish authorities.
Browder has also urged various government authorities to bring money laundering cases against Danske.
“We see the prospect of a criminal lawsuit from Bill Browder and any potential U.S. investigation as price-sensitive issues,” Jefferies analysts said.
Additional reporting by Niklas Pollard and Johannes Hellstrom in Stockholm; editing by Keith Weir/Jason Neely/Jane Merriman/Alexandra Hudson