Company registration, offshore services, account openings
Shares fall as Danske Bank and Nordea profits drop by more than a quarter.
Investors continue to turn away from the two largest banks in the Nordic region as concerns grow over a massive money laundering scandal and an economic downturn.
Danske Bank, Denmark’s largest lender, has revised its profit forecast for the year due to increased funding and general expenses related to the 200 billion euro money laundering scandal. Its shares, which had halved in value last year following criminal investigations into the bank in the US, Denmark, and Estonia, fell another 8% on Tuesday.
“It has been a difficult start to the year. From a trust perspective, Danske Bank definitely has a question mark,” said Jesper Nielsen, acting CEO, to the Financial Times.
Nordea, the largest bank in Scandinavia, has received a 95 million euro reserve from Danish regulators for a potential fine due to weak anti-money laundering controls, as it reported worse-than-expected results in the first quarter. Its shares fell by 3% on Tuesday.
“There is a lower growth environment, but I do not see a looming recession risk. However, the risk is on the negative side,” said Casde von Koskull, CEO of Nordea, to the FT.
Nordic banks are embroiled in one of the largest money laundering scandals ever, used by criminals in Russia and other former Soviet Union countries to move funds into the Western banking system, primarily through operations in the Baltic states.
Danske is under investigation by the US Department of Justice and the Securities and Exchange Commission, while Swedbank, Sweden’s oldest lender, faces numerous inquiries from New York state regulators.
All Scandinavian banks are ramping up their compliance and anti-money laundering efforts, including hiring a large number of new staff, in an effort to regain investor and client trust.
Danske has increased its number of compliance staff to 1,700 from 1,200 a few months ago. “Ensuring this does not happen again is a significant investment,” said Nielsen. He added that there are some signs that the bank has started to focus on business rather than the money laundering scandal with its clients.
Nordea has also had issues with money laundering and has been the subject of several criminal complaints from investor and Kremlin critic Bill Browder. Von Koskull reiterated that Nordea acknowledged having “historical issues with processes and anti-money laundering safeguards,” but today it is a “completely different place.”
“Do I see a ‘fall in trust’ in the business? No. But I feel it. Banking is a trust issue. After the financial crisis, trust significantly deteriorated, and that is something we need to be very aware of. We live in a different world than we did five or ten years ago,” he added.
Danske’s net profit in the first quarter fell by 39% compared to the previous year to 3 billion Danish kroner (400 million euros). Nielsen said the bank has become more cautious about mortgage lending in Denmark’s largest cities, as some economists worry about changes in the cycle.
Nordea’s operating profit fell by 36% to 621 million euros. The bank, which recently moved its headquarters from Sweden to Finland, has spent more than 700 million euros on compliance over the past three years.
Shares in SEB, one of Sweden’s largest banks, fell by 2% after reporting mixed first-quarter results. CEO Johan Torgeby said that while SEB has largely avoided negative headlines about money laundering, it has preached humility.
“We know what we know and feel comfortable over the last eight, nine, ten years. But you need to be very vigilant because tomorrow you might find something you don’t know today… We cannot guarantee that we won’t miss criminal activity passing through our bank,” he added.
He also expressed some concern about “clouds in the sky,” saying that some companies are scaling back their investment plans in the medium term due to economic uncertainty.
We help with opening/registering businesses/firms in Germany, Austria, and other countries.
Your Investmakler