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Swedbank $40 Billion Headache Adds to Pressure on Fired CEO

Swedbank Probe Unearths $40 Billion of ‘High Risk’ Transactions

(Bloomberg) --

A fresh report shows Swedbank AB handled about $40 billion in dirty money, and raises new questions about top management’s culpability.

The Stockholm-based bank, which has already been fined a record 4 billion krona ($385 million) by Swedish authorities, will now cancel the $2.5 million in severance pay originally set aside for ousted CEO Birgitte Bonnesen, it said on Monday. She was fired a year ago for misleading the public about the severity of Swedbank’s laundering affair.

The case forms part of a broader complex of scandals that includes Danske Bank A/S and reveals the systematic flow of dirty money from the former Soviet Union via the eastern outposts of Nordic banks and into the West.

Clifford Chance, legal consultants hired by Swedbank to look into the allegations against it, found that between 2007 and 2019, “the bank’s senior management failed to establish clear lines of AML-related responsibilities and that Swedbank’s CEOs throughout the review period all had a lack of adequate appreciation for the risk posed by the high-risk non-resident customers to the bank.”

Bonnesen became Swedbank’s CEO in early 2016, after replacing Michael Wolf, who’d led the bank since 2009.

Jens Henriksson, who took over as Swedbank CEO in October, said, “It’s obvious that there have been cultures in the bank that are not acceptable.” A review has been launched to find out what went wrong and how to avoid a repeat, he said.

Swedbank faces allegations it may have handled up to $155 billion in potentially suspicious transactions. Earlier this month, it emerged that 586 transactions worth about $4.8 million were probably on the wrong side of U.S. sanctions laws. Most of those were related to a vessel whose owner and operator were in Crimea, the Ukrainian peninsula that was annexed by Russia in 2014. Investigators are still looking into the case and Swedbank may yet face a U.S. fine.

With the risk of more fines, Swedbank’s “capital position is tight,” according to analysts at Bloomberg Intelligence. Henriksson said the Swedish fine “doesn’t affect our ability to lend money, fundamentally we have a very strong capital situation.”

Per Hansen, an investment economist at Nordnet in Copenhagen, said the fine imposed by Swedish authorities points to the questionable role played by Bonnesen.

“The Swedish FSA made it pretty clear,” Hansen said in a note to clients. “Management wasn’t cooperative enough, leaving no doubt that this was a very important and aggravating circumstance in determining the size of the fine.”

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