Laundering scandal | Swedbank may have handled over USD4.3 billion in dirty money

Niklas Magnusson, Hanna Hoikkala & Frances Schwartzkopff

The biggest bank operating in the Baltics, Swedbank AB of Sweden, has now been drawn into the region’s deepening money-laundering scandal.

Swedbank spokesman Gabriel Francke Rodau acknowledged that the lender has identified suspicious transactions, which he says have been reported to the police.

The comments followed a report by Swedish broadcaster SVT, alleging that some 50 customers at Swedbank, who all displayed “clear warning signals regarding suspected money laundering,” transferred about 40 billion kronor (USD4.3 billion) between Swedbank and Danske Bank A/S from 2007 to 2015. Rodau said Swedbank “doesn’t recognize” those numbers.

Bill Browder, the Hermitage Capital Management co-founder who has made it his profession to chase money launderers, warned that the amounts cited in Swedish media are likely to be “just the beginning.” He said he has his own evidence linking Swedbank to the Danske case and that he had been planning to bring a criminal complaint against the Swedish lender.

Swedbank’s shares fell about 10 percent in Stockholm on Wednesday, putting it at the very bottom of the Bloomberg index of European financial stocks. SEB AB, the second-biggest bank in the Baltics, fell almost 3 percent in trading in the Swedish capital.

“If the information is correct, there are two alternatives: they have known about it but let it continue or they haven’t checked and the transactions haven’t triggered any alarm,” said Joakim Bornold, a savings adviser at Soderberg & Partners in Stockholm. “I don’t know what’s worst.”

Alecta, which is one of Swedbank’s biggest investors with about 5 percent of the shares, has been in touch with the lender to discuss the allegations, according to Ramsay Brufer, head of ownership at the occupational-pensions provider.

“Money laundering is one of the biggest challenges for the banking sector today,” Brufer said in an emailed response to questions. “It is a crime that we take very seriously.”

Swedbank’s share-price decline yesterday shaved about USD2.3 billion off its market value, representing its worst day since August 2011. SVT said that the 40 billion kronor in suspicious transactions translates into almost USD6 billion, when using an average dollar-krona exchange rate for the nine-year period during which the illicit transfers are alleged to have taken place.

‘Denials Will Be Overlooked’

The SVT report shows that “the biggest lender to the Baltic region can’t fully shake off links to Danske’s probe,” Bloomberg Intelligence analysts Philip Richards and Georgi Gunchev wrote yesterday. “While alleged amounts are swamped by those of its Danish rival, the bank’s denials will remain overlooked until the full facts are known, in our view.”

The development comes as a USD230 billion scandal engulfing Danske continues to spread, with the financial regulators in Denmark and Estonia now under formal investigation by the European Banking Authority. Sweden’s financial regulator declined to immediately comment on the SVT report.

Before yesterday, Swedbank had vehemently denied any involvement in the case, with Chief Executive Officer Birgitte Bonnesen repeatedly going on the record to say management had looked and found no links to the Danske laundering scandal.

“Swedbank must take this very seriously,” Bornold said. “The big mistake Danske did was that they were too nonchalant and it cost them huge values and even the Estonian permission yesterday.” Niklas Magnusson, Hanna Hoikkala & Frances Schwartzkopff, Bloomberg