Friday 5 October 2018 11:42 am

Danske Bank shares crash to four-year low over Russian money laundering

Follow Emily Nicolle

Shares in Danske Bank plunged to four-year lows this morning, after reports of an internal memo suggested the bank executed up to €8.5bn (£7.5bn) in mirror trades for Russian customers in 2013.

The bank's share price fell as much as 11 per cent this morning to 141.30 Danish crowns, its largest one-day drop in seven years. Since the scandal was made public eight months ago, shares have fallen 43 per cent.

The memo, seen by the Financial Times, indicated that Dankse Bank executed between €6bn and €8.5bn of mirror trades in 2013, accumulating an estimated €10m payout for its work.

It said:

There is potential reputational risk in being seen to be assisting ‘capital flight’ from Russia.

This is anyway a risk we run in other parts of our non-resident business, where the natural currency flow is always out of Russia.

Given the strong income from the solution, the risk-return is seen as very attractive.

Read more: Danske Bank faces US probe over €200bn money laundering scandal

The news comes as Danske faces a criminal probe by the US department of justice for its role in the scandal, which had already prompted the resignation of former chief executive Thomas Borgen.

The Danish bank reported last month said that it had reported "almost all" of the 6,200 customers in a so-called non-resident portfolio. As much as €200bn flowed through those accounts, with the heavy involvement of UK limited liability partnerships.

A share buy-back programme has also been halted. Credit Suisse downgraded its rating of the bank from 'neutral' to 'outperform' this morning, cutting its target price from 199 crowns to 244 crowns.

Danske Bank did not immediately respond to a request for comment.