Danske Bank could be fined $8 billion after its huge money laundering scandal, analysts say

Danske Bank, Denmark's biggest lender, has been rocked by a money-laundering scandal which may have involved $235 billion.
If the bank is found guilty of any wrongdoing it will likely face a significant fine.
One estimate suggests the fine could be as high as 53 billion Danish krone ($8.3 billion), while others believe somewhere in the hundreds of millions of dollars is more likely.
The bank has not yet been found to have done anything wrong, so a fine may not be levied at all.

Danske Bank admitted on Wednesday that as much as $235 billion of transactions flowing through its Estonian branch between 2007 and 2015 may have been suspicious, and connected to potential money laundering.

So far, the bank's CEO, Thomas Borgen has resigned, saying that while an investigation into the branch found no legal wrongdoing from him, he believed the best course of action was to stand down.

"It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia," he said in resigning on Wednesday.

As well as Borgen's resignation, Danske has already had to contend with a sharp drop in its share price as investors pull out in anticipation of possible regulatory and legal punishments on the back of the scandal.

Going forward, however, another major issue the bank is likely to have to contend with is one or more substantial fines for its failings in the scandal. No one knows how much any potential fine will be yet, or even if any will be levied, but early estimates range from hundreds of millions of dollars, to billions.

Perhaps the biggest estimate of how much the fine may be so far comes from Danish bank Jyske Bank, a key competitor of Danske Bank. According to a column from Breakingviews, analysts at Jyske have calculated that the heaviest penalty for Danske Bank could amount to 53 billion Danish krone ($8.3 billion).

That is based on about $150 billion of the Estonian transactions being fraudulent, and regulators following the penalties they have imposed on the likes of Deutsche Bank and BNP Paribas in previous incidents.

Most estimates are significantly less extreme than that outcome. Credit Suisse, for example, said in a note on Wednesday that markets are expecting the total fine to be below 15 billion krone ($2.3 billion), around 28% of the most pessimistic forecast from Jyske.

The Danish government has also put a smaller number on a potential fine for Danske Bank if it is found to have committed any wrongdoing.

Danske Bank could be fined $8 billion after its huge money laundering scandal, analysts say

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