Denmark Sees No Reason to Call Out Supervisors Over Danske Bank

(Bloomberg) -- The money laundering scandal enveloping Denmark’s largest bank doesn’t imply criminal behavior at the country’s financial regulator, according to the minister responsible for the agency.

While Business Minister Rasmus Jarlov said the Financial Supervisory Authority made plenty of mistakes supervising Danske Bank A/S, he wouldn’t directly blame any individuals at the agency.

Danske said last month that about $235 billion, much of it suspicious, flowed through its tiny Estonian unit over a period of nine years. The scope of the potential laundering has raised questions about the FSA’s supervision.

“There’s nothing indicating that anything criminal happened at the FSA or any other significant failures that would require us to place a responsibility with the FSA,” Jarlov said in an interview in Copenhagen. “I also sense that we have a supervisor that wants to learn from this event, and that’s what we should focus on.”

Danske faces probes in five countries, including criminal investigations in the U.S. and Denmark. Its share price has plunged about 40 percent since the start of the year. The European Banking Authority meanwhile is investigating Danish and Estonian regulators, specifically the “extent and depth” of inspections and use of sanctions.

Denmark’s FSA has said it trusted Danske’s self-reporting more than it should have and is now cooperating fully with the EBA. The agency is headed by Jesper Berg, who become director general in October 2015. His predecessor was Ulrik Nodgaard, who held the position from January 2009. The suspicious transactions date back to 2007, when Danske acquired the Estonian branch as part of larger deal. Nodgaard declined to comment.

Performance Review

Jarlov said he had asked the FSA to review its performance, to see what can be learned in order to prevent a repeat. He said he’s not going after anyone in particular at the Copenhagen-based agency.

“I don’t see any point in targeting specific individuals that no longer works at the supervisor,” Jarlov said.

He also said he was committed to restoring Denmark’s reputation in the wake of the scandal.

“The Danish economy is rock solid and we also have a very solid financial industry, so I don’t see any reason to be worried,” he said. “I’m determined to ensure that the financial industry emerges from this case in better shape.”

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