Danske Bank A/S’s Estonian operations may have been used to launder as much as $8.3 billion in a case that has rocked Denmark and triggered calls for tougher penalties from the country’s political establishment.
The amount, which represents roughly a third of Danske’s market value and almost 3% of Danish GDP, is more than double that was previously estimated, according to figures first reported by Berlingske and confirmed by Bloomberg. The alleged illicit transactions span the years 2007 to 2015.
Shares in Denmark’s biggest bank opened more than 3% lower in Copenhagen on Wednesday, making Danske the day’s worst performer in the Bloomberg index of European financial stocks, which was little changed.
“It’s not clear what the consequences might be as the volume of this case is much bigger than anyone could have imagined,” said Christian Thatje, an equity dealer at Sydbank A/S. “This case brings a lot of uncertainty and investors don’t like that.”
Danske Bank’s riskiest euro and dollar bonds also lost ground Wednesday morning. The 7% dollar contingent convertible bond dropped a cent to 97.1 cents on the dollar, while the 5.76% euro CoCo fell to its lowest level since January 2017.
It’s not known who exactly is behind the transactions, but previous leaks showed money made its way from Russia, Moldova and Azerbaijan through Danske’s laundromat. The laundering is also thought to have involved funds linked to an illicit scheme exposed by Sergei Magnitsky, an auditor who died in custody in Russia in 2009.
Bill Browder, who was expelled from Russia in 2005 after his firm Hermitage Capital Management released documents it said exposed corporate and government corruption, said he will use the latest allegations against Danske as the basis for an official complaint.
