Danske Plot Thickens as Correspondent Banks Are Drawn Into Fray

(Bloomberg) -- The money laundering case surrounding Danske Bank A/S looks to have grown in scope. During the past week, we learned that investigators are looking into the role played by correspondent banks in the scandal. And the Finnish firm from which Danske bought the toxic Estonian assets in 2007 may also be drawn into the probe.

The week also revealed the date of Danske’s EGM (Dec. 7), at which the bank’s biggest shareholder is expected to oust the chairman.

Here are some of the other main developments in the Danske story over the past week:

  • There was some tension between Danske and the banker turned whistle-blower. Howard Wilkinson’s lawyer says Danske warned his client that he faces legal risks if he testifies to lawmakers. But Danske says it has made clear that Wilkinson is free to speak to Denmark’s parliament on Nov. 19 and to EU lawmakers two days later, and is bound only by general laws.
  • Danske’s interim CEO Jesper Nielsen will also be testifying. The bank has reportedly picked headhunter Korn Ferry to find a permanent chief after Nielsen said he wasn’t a candidate.
  • Denmark’s prime minister said he feels “deceived” by Danske and other banks as the country is overwhelmed by financial crime. The opposition joined in on an attack against the finance industry during a heated parliament debate.
  • Eight former Danske staff members in Estonia may have received cash payments from money launderers, Berlingske said. The paper also reported that prosecutors are targeting individual mangers as part of their probe.
  • And there was renewed focus on the Danish FSA: Bill Browder filed a complaint against the regulator for failing to stop the laundering in time. The FSA’s former director general, who’s now a bank lobbyist, was also dragged into the case. Meanwhile, the regulator went out and defended its actions.
  • The scandal also affected a bond auction. Danske’s Finnish unit issued its first mortgage covered bond in three years at a yield that seemed to reflect investor concerns.
  • There were a few bright spots for Danske: The bank is getting more than 75,000 new customers in Norway, and MP Pension is taking Danske off its quarantine list. Meanwhile, Kepler Cheuvreux raised its rating on the bank to buy, saying the laundering scandal has been priced in after the recent “heavy beating” that the stock took.

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