Danske Bank rises after agreeing $2 billion U.S. money-laundering fine

By Geoffrey Smith 

Investing.com -- Shares in Danske Bank (CSE:DANSKE) rose 1.5% to test a three-year high on Wednesday, after Denmark's biggest bank was handed a $2 billion fine for money laundering through its branch in Estonia.

The bank pleaded guilty to defrauding U.S. lenders by laundering money for criminals based largely in Russia and the former Soviet Union from 2007 onward. The bank said it "fully accepts the findings" of the Department of Justice and Securities and Exchanges Commission, "and apologises unreservedly for the unacceptable historical failings and misconduct, which have no place at Danske Bank today."

Under its previous management, Danske had funneled billions of dollars through the U.S. financial system on behalf of criminal clients. It closed its banking operations in all of the Baltic states in 2019, months after the scale of the money laundering became apparent.

Danske Bank stock has never recovered from the revelations: despite rising by over 40% since November, when it signaled that a deal was near by announcing a big provision for the settlement, it still trades at barely half its 2017 peak. The bank said at the time it would suspend its dividend for 2022. However, it remains one of the best-capitalized banks in Europe: its common tier 1 equity ratio, a rough measure of financial strength, stood at nearly 17% at the end of the third quarter, well above regulatory minimum requirements. 

With uncertainty over the financial settlement lifted, the bank expects its return on equity next year to be in the upper part of its target range of 8.5% to 9%.