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Danske discloses that it will soon pay $2 billion to settle the Estonia AML scandal

The long-running money-laundering investigation that spans the US and Denmark will be resolved by Danske Bank paying more than $2BN in fines, the bank announced on Thursday.

The largest bank in Denmark announced this morning that it took an additional charge of DKr14BN ($1.9BN) to bring its total provision for the settlement to DKr15.5BN ($2.1BN).


By the end of the year, the bank hopes to have an agreement in place with the US Department of Justice, the US Securities and Exchange Commission, and Denmark's special crime unit.


Since it was disclosed that €200 billion of cash moved through Danske's Estonian branch between 2007 and 2015 from nations like Russia, the company has been at the center of one of banking's biggest dirty money scandals.


Due to the imminent settlement, shares of Danske increased by 11% on Thursday as investors praised the end of the bank's biggest uncertainty.

"Danske Bank is now in a position to reliably estimate with a high degree of certainty the financial impact of a potential co-ordinated resolution with these authorities, at a total of DKr15.5bn," according to CEO Carsten Egeriis.


The lender clarified however that there was still some “uncertainty” that a resolution could be realised but the Copenhagen headquartered lender is targeting a year-end closure.


"The discussions with US and Danish authorities related to the Estonia matter are now at a stage, where Danske Bank can reliably estimate the total financial impact of a potential coordinated resolution," according to Egeriis.


"Our dialogue with the authorities is ongoing, and while there is still uncertainty that a resolution will be reached, we hope that a resolution will be concluded before the end of this year," he continued.


But the affair is far from over. Danske is still facing several civil actions, and it issued a warning on Thursday that the litigation could result in "material" losses for the bank.


In the wake of the incident, the Danish bank fired its chair and chief executive. Separately, the company's previous CEO resigned after being linked to a different money-laundering case, opening the door for the CFO at the time, Carsten Egeriis, to take over as CEO.


Before the revelations regarding the scope of the money laundering, Danske's shares were half the price they are now.


Separately, Thomas Borgen, the company's former chief executive during the majority of the scandal, is being sued by a number of prominent shareholders. A preliminary ruling is anticipated next month.


In relation to the scandal, Danish prosecutors last year dismissed all charges against Borgen and other top executives.


The oldest bank in Sweden, Swedbank, has also been impacted by the dirty money creep in the Nordic region, and its former CEO is currently on trial for the matter. The lender is also the subject of a US government inquiry.


Additionally, Danske's CEO stated this morning that due to the probable Estonian penalty, the bank will see a net loss of "better than" DKr5.5 billion this year as opposed to its previous projection of DKr10 billion to DKr12 billion.


According to a report, the bank's third-quarter net profit for the year changed from DKr3.3 billion to DKr13.8 billion.

By fLEXI tEAM



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