Danske Is ‘Truly Sorry’ But Some Investors Still Won’t Touch It
(Bloomberg) -- For the first time in months, a statement published by Danske Bank A/S didn’t contain an awful surprise.
The bank’s pledge to fight financial crime and absorb potential fines for money laundering resulted in its best share performance in more than two years. Analysts cheered management’s words as the interim chief executive officer said Danske is “truly sorry” for its role in one of the worst dirty money scandals in Europe’s history. The stock jumped as much as 6.6 percent.
But a lot was left unsaid. Investors still don’t know who will run the bank in the longer term (interim CEO Jesper Nielsen has said he doesn’t want to), and are no wiser about the size of fines that Danske may be facing.
Anders Nordborg, who manages a hedge fund in Sweden that’s part of Excalibur Asset Management AB, said his decision earlier this year to sell all his contingent convertible bonds in Danske is unaffected by Thursday’s statement.
“We probably won’t touch their papers in several months yet,” he said by phone.
After admitting in September that much of about $230 billion that flowed through a tiny Estonian unit probably needs to be treated as suspicious in origin, Danske is under criminal investigations in the U.S., Denmark and Estonia. Analyst estimates for fines range as high as about $8 billion, while the bank’s share price has slumped about twice that much this year.
Lots of Bad NewsDanske’s $250 Billion Wealth Unit Slumps in Latest Ranking
Danske Bank’s Turmoil Deepens as Regulator Rejects Top CEO Pick
U.S. Scrutiny of Danske Scandal Changes Everything for Investors
Danske Is Europe’s Worst Bank Stock as Estonia Scandal Grows
Danske Bank Says U.S. Is Now Investigating Laundering Case
Danske CEO Is Leaving the Scandal-Hit Bank With Immediate Effect
Danske Bank’s Danish Customer Satisfaction Slumps in EPSI Survey
Danske Chairman Says ‘Large’ Part of $234 Billion Is Suspicious
Nordborg says he wants to learn more about the U.S. investigation, and how the bank’s management handles the situation, before he would consider buying Danske’s notes again.
“Just words aren’t enough,” he said. “These things will take time.”
Danske shareholder MP Pension, which has about $20 billion in assets under management, says nothing in Thursday’s report will change its decision earlier this year to black-list the shares.
“Today’s report changes nothing in our view of Danske Bank,” Jens Munch Holst, the Danish pension fund’s CEO, said by email. “It didn’t add clarity on the key issues and the shares remain quarantined.”
Other investors declined to comment. Swedish asset manager Prior Nilsson, which sold all its stock in Danske earlier this year, said it had nothing to add after Thursday’s report.
At Bloomberg Intelligence, analysts Philip Richards and Georgi Gunchev said that only once questions relating to a new CEO and possible fines “are resolved, and the customer reaction to its reputational damage is known, can the lender move on.”
By Friday, a number of analysts had cut their price targets for Danske, including Societe Generale and Credit Suisse.
To be sure, some key investors have voiced confidence in Danske. ATP, Denmark’s biggest pension fund with about $120 billion in assets, says it will stay a committed long-term shareholder. In an interview earlier this week, CEO Christian Hyldahl said ATP’s “approach is very much to be an active owner and make sure the bank comes through the crisis. We’re here to support Danske Bank in that process.”
©2018 Bloomberg L.P.