Danske Bank is being investigated by the U.S. Department of Justice over a 200 billion euro ($230 billion) money laundering scandal involving its Estonian branch, confirming long-held investor fears.
Denmark’s largest bank said in a statement on Thursday that it had “received requests for information from the U.S. Department of Justice (DOJ) in connection with a criminal investigation relating to the bank’s Estonian branch”.
The bank, which this week appointed Jesper Nielsen as interim chief executive to handle the growing crisis after the resignation last month of Thomas Borgen, said it was cooperating with the U.S. authorities.
Shares in Danske Bank fell by three percent to 160 Danish crowns, their lowest level since January 2015 and a 33 percent decline so far this year, as investors digested the latest developments at the bank.
Shareholders have fretted for months over the possibility of U.S. authorities investigating whether Danske Bank broke U.S. rules in allowing payments through its Estonian operation because of the potential for significant penalties.
France’s BNP Paribas reached a record $8.9 billion settlement with U.S. authorities in 2015 to resolve claims that it violated sanctions against Sudan, Cuba and Iran.
Many of the non-resident accounts at Denmark’s Estonia branch were held by entities or individuals in Russia, which is the subject of sanctions by the United States.
Banks doing business in Estonia handled more than $1 trillion in cross-border flows between 2008 and 2017, the country’s central bank said on Wednesday.
Sweden’s Swedbank said on Thursday there were “no ongoing investigations” into its anti-money laundering practices by any of its regulators.
In a sign of the impact criminal and regulatory investigations in Estonia, Denmark and the Britain are having on the lender, Danske Bank said it would end its share buyback program after reassessing its capital targets.
It had initially planned to buy shares back worth 10 billion Danish crowns ($1.5 billion) under the program, which should have run until Feb 1 next year. It had repurchased shares worth 6.8 billion under the program as of the end of last week.
This followed an assessment by Denmark’s Financial Services Authority which said Danske Bank’s compliance and reputational risks were now higher than previously thought in May.
The FSA did not mention the U.S. authorities in its 12 page follow-up report published via Danske Bank on Thursday.
The FSA said in May that the bank’s Pillar II capital requirements should increase by 5 billion Danish crowns but it has now ordered Danske to reassess its solvency need “with a view to increase the add-on to an absolute minimum of 10 billion crowns”.
The bank has therefore raised its CET1 capital ratio target to around 16 percent from a target of 14-15 percent and its total capital ratio to be above 20 percent from an earlier target of above 19 percent.
By end of the second quarter the bank’s CET1 ratio stood at 15.9 percent and its total capital ratio stood at 21.6 percent.
Last month the bank said in an internal report commissioned by Borgen that payments totaling 200 billion euros, many of which it described as “suspicious”, had been moved through its tiny Estonian branch between 2007 and 2015.
The findings of the report led to Borgen taking “ultimate responsibility” and stepping down, although he says he was cleared from a legal point of view, and prompted regulators across the European Union to question their oversight.
Politicians in Europe are calling for stricter measures to prevent money laundering in the bloc’s banks, after Dutch financial group ING was fined 775 million euros last month after admitting criminals had been able to launder cash through its accounts.
Brexit Will Not Happen Next Week
Brexit will not happen next week. The United Kingdom has been granted a bit more time to figure out the terms of its departure from the European trading bloc. The date could be April the twelfth or may the twenty-second.
European Council President, Donald Tusk, says he would push the departure date to May the twenty-second if the UK parliament approves a withdrawal agreement next week.
Parliament’s failure to approve the Brexit deal next week would mean deadline for departure from the European Union will be April the twelfth.
The decision to grant the delay came a day after may delivered a televised speech blaming parliament for the Brexit impasse. That speech angered the political spectrum.
May hopes with this European Council next decision, the House of Commons would pass a Brexit deal next week. She says that would help bring an end to the uncertainty and would help the UK to leave Europe in a smooth and orderly manner.
Chemical Factory Explosion In China Kills 47, Injures Over 600
An explosion at a chemical plant that occurred on Thursday in China’s eastern Jiangsu province has killed 47 people and injured over 600, among which 90 are critically injured, state media reported.
The fire which happened at a plant that contained highly inflammable chemical owned by the Tianjiayi Chemical Company spread to neighbouring factories was finally brought under control at 3.00 a.m. on Friday.
President Xi Jinping, who is in Italy on a state visit, ordered all-out efforts to care for the injured and to “earnestly maintain social stability”, state television said.
Reuters disclosed that some police at the scene were wearing face masks, sealed off roads to the plant. The blast smashed windows in the village of Wangshang two kilometres (1.2 miles) away, and shocked villagers likened it to an earthquake.
New Zealand Bans Sale Of Assault Rifles, Semi-Automatic Weapons
New Zealand has banned the sale of assault rifles and semi-automatic weapons after the country’s worst-ever attack in which fifty persons were killed in two mosques.
Prime Minister Jacinda Ardern told a news conference the ban is in the national interest and it’s about safety… To prevent an act of terror from ever happening again in New Zealand.
Ardern said she expects the new law to be in place by mid-April. Buy-back schemes will be established for banned weapons.
Ardern said the suspect arrested in the attacks had purchased his weapons legally and enhanced their capacity by using 30-round magazines “done easily through a simple online purchase.”
The changes in New Zealand’s gun laws are expected to curtail future acts of random violence like the mass mosques shootings in Christchurch.
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