Danske Bank's Estonian branch is suspected of handling up to $230bn of iffy funds from former Soviet states. There may be more scandals to come
scandal that struck Danske Bank last year was staggering. The Danish lender’s Estonian branch is suspected of handling up to $230bn of iffy funds from former Soviet states. Aftershocks are rumbling under other European banks. Shares in Austria’s Raiffeisen Bank International tumbled by more than 12% on March 5th after a complaint was filed accusing it of “gross negligence or acquiescence” in connection with suspicious flows from Danske. Raiffeisen says it is investigating.
Raiffeisen is just the latest bank to be suspected of channelling dirty money from Europe’s eastern fringes. Helsinki-based Nordea and Sweden’s Swedbank are among those embroiled in the Danske affair. Swedbank’s share price has shed 18% since it was linked to Danske last month . Some banks have been stained by a separate scheme, the “Troika Laundromat”. European banks caught up in such allegations have lost €20bn or so in stockmarket value in the past six months.
But investors have good reasons to be jittery. More suspicious transactions are likely to be unearthed. Probes are under way in Denmark, Estonia, Britain, France and America. It is the last of these that turns shareholders’ stomachs. America does not take money-laundering lightly. In 2012 it finedEurope may get tougher too. Calls are growing for the European Central Bank or the European Banking Authority, anagency, to be given more powers over national watchdogs.
Then there is the interruption that such scandals bring. It is anyone’s guess how much time Danske’s interim boss, Jesper Nielsen, and his team have had to devote to cleaning up the mess. Such distractions are rarely good for business."Europe awash"
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