Danske Bank CEO Quits Amid Dutch Probe of Laundering Allegations

Danske Bank A/S is replacing Chris Vogelzang as chief executive officer after a Dutch money-laundering investigation implicated the former ABN Amro Bank NV executive, complicating the Danish lender’s efforts to get past its own scandal.

Vogelzang, who had run Denmark’s biggest bank for less than two years, will be replaced by Danske’s head of risk management, Carsten Egeriis. The move comes after authorities in the Netherlands named Vogelzang “a suspect in connection with their investigations of potential violations of Dutch legislation relating to the prevention of money laundering at ABN Amro,” Danske said.

“I am very surprised by the decision by the Dutch authorities,” Vogelzang said in the statement. “I left ABN Amro more than four years ago and am comfortable with the fact that I managed my management responsibilities with integrity and dedication. My status as a suspect does not imply that I will be charged.”

Danske is itself the subject of multiple investigations into money laundering in both the U.S. and Europe, resulting in several top executive departures in recent years. Vogelzang came on board in 2019 to help the bank clean up its act and rehabilitate its image as a law-abiding, transparent institution. Fellow Dutchman Ralph Hamers, the CEO of UBS Group AG, also faces a lengthy Dutch legal battle over his role in a money laundering scandal during his time as head of ING Groep NV.

Read: Dutch Prosecutor Finds Three Suspects in ABN Amro Criminal Probe

Danske Bank CEO Quits Amid Dutch Probe of Laundering Allegations

In a separate statement on Monday, the Public Prosecution Service in the Netherlands accused ABN of breaching anti-money laundering laws for years. It said it was opening a criminal investigation into three people, whom it didn’t identify by name.

At ABN Amro, Vogelzang was head of retail and private banking for eight years until he left in early 2017 amid a management shake-up. Local media reported at the time that Vogelzang was seen by the bank as the natural candidate to become CEO, but was sidelined because the Dutch government, which owns more than half of ABN, wanted someone with “social antennae.”

ABN Amro said today it expects to post a “modest” first-quarter loss after agreeing to pay 480 million euros ($574 million) to end a Dutch investigation that found “serious shortcomings” in its processes to combat money laundering.

History of Laundering

Danske gained international notoriety back in 2018, when it admitted that a large part of 200 billion euros ($240 billion) in non-residential flows through a unit in Estonia was suspicious. That ended the career of a string of Danske executives, including former CEO Thomas Borgen, who has himself been the target of several investigations linked to the affair.

Borgen was initially replaced by Jesper Nielsen, who had climbed the ranks within Danske. Nielsen was later forced to leave the bank due to a separate scandal in which the lender was found to have misguided investment clients.

According to Monday’s statement, Vogelzang informed Danske’s board that he “wishes” to resign after news of the allegations surfaced.

“We really looked into everything at that time, all the candidates we visited, we were very careful,” Danske Chairman Karsten Dybvad said in a phone interview about Vogelzang’s recruitment. “I mean, that’s almost obvious with the situation that Danske Bank was in, so I must say I’m surprised that we’ve got into this situation today.”

A.P. Moller Holding A/S, the Danish bank’s biggest shareholder, used its clout back in late 2018 to drive out a former Danske chairman for failing to prevent the laundering scandal. Its CEO Robert Uggla said Vogelzang “contributed greatly to Danske Bank’s turnaround and as shareholder I thank him for his leadership and huge efforts.”

Aside from Vogelzang, Danske said Gerrit Zalm, a former ABN Amro CEO and an erstwhile finance minister of the Netherlands, will also step down from its board, effective today.

Danske Bank’s transformation program and 9-10% ROE goal should remain on track -- despite CEO Chris Vogelzang’s resignation being a blow to its efforts to move on from its still-unresolved scandal -- highlighting that scandal threats aren’t yet over. Vogelzang was announced a suspect in the Dutch public prosecutor’s probe into ABN Amro’s money-laundering violations, and is replaced by Carsten Egeriis, the former Chief Risk Officer.

-- Philip Richards, Bloomberg Intelligence banking analyst

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Dybvad said the bank has the Financial Supervisory Authority’s assurances that Egeriis can stay on as CEO permanently. Egeriis, who has been a member of Danske’s executive management team as chief risk officer for almost four years, “has had a pivotal role in our remediation efforts and in the strengthening of the risk area over the last years and not least in the bank’s handling of the corona crisis,” Dybvad said.

Robin Rane, an analyst at Kepler Cheuvreux, called the development “unfortunate. Vogelzang has been, in my view, competent in leading the bank through its current transformation.” He also said he has “no reason to doubt” that Egeriis is a “suitable” choice to replace Vogelzang.

Hamers Case

UBS CEO Hamers, hit with a probe by the Dutch public prosecutor barely a month after taking over in November, faces an investigation that’s expected to drag on for some time. Switzerland’s largest bank is contending with the risk that its CEO could be indicted for breaching anti-money laundering and compliance rules while at the helm of ING.

A previous Dutch probe into the matter ended in a settlement in 2018, with ING taking responsibility. The public prosecutor said it didn’t find enough evidence for criminal accusations against individuals at ING, including the top management. Dutch prosecutors have since come under pressure for not holding individuals accountable in banking scandals. Financial activist Pieter Lakeman appealed the ING decision and sought charges against Hamers personally, leading judges to order the probe.

While the December ruling to look into Hamers’s personal responsibility loosely outlined money laundering and breaches of compliance law as accusations against him, the investigation may unearth new information from interviews with key people, including Hamers, as well as emails and other communications that were not part of the previous case against ING, people familiar said in January. If the case does go to trial, it would only prolong the matter and Hamers could be asked to attend in person.

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