Saturday , October 20 2018

Danske threat to Danish AAA rank triggers political action

Bloomberg

As Denmark comes to grips with its role in one of Europe’s worst dirty money sagas, its parliament is working overtime to stop the nation’s credit rating from being dragged down by
the scandal.
Danske Bank A/S has admitted that about $234 billion flowed through a tiny unit in Estonia between 2007 and 2015, and is treating a “large” share of that amount as “suspicious” transactions. Chief Executive
Officer Thomas Borgen has resigned and several employees have been reported to the police. Criminal investigations are ongoing and the government says Danske may face a $630 million fine.
S&P Global Ratings says the sheer scale of the scandal has put the Danish government’s AAA credit grade at risk. S&P first made the comment in a September 14 note, and said the view still holds, when contacted by phone on September 20. It’s a warning that has Danish politicians worried, and on Wednesday parliament quickly agreed on a package of much stricter laws to fight money laundering.
Rasmus Jarlov, Denmark’s business minister and the man who oversees financial legislation in the country, says S&P’s assessment makes clear the government needs to act. In an interview, he said previous signals from the administration that bank regulations might be softened are now going nowhere.
“I don’t have any intention to lower capital requirements,” he said. Danske shares fell about 2.9 percent in Copenhagen on Monday, bringing losses this year to 32 percent. Other Danish bank stocks also fell. Danske is now the year’s worst performing European financial stock in the Bloomberg index, after Deutsche Bank AG.

Europe’s Biggest Scandal
The Danske Bank scandal “is hurting the Danish financial sector’s reputation, which makes it urgent that we respond and draw up some consequences for everybody to see that we’re treating this with the utmost seriousness.”
The spectre of a sovereign ratings downgrade hung over lawmakers’ heads on September 19 as they agreed on measures that include raising bank fines by 700 percent. PM Lars Lokke Rasmussen said the same day that the Danske case is far from over.
The sense of shock throughout Denmark’s political establishment was palpable as lawmakers across party lines expressed dismay and underscored the need to take a tough stance. The laundromat case has unsettled a country generally associated with some of the world’s lowest levels of corruption and highest levels of transparency.
It’s also left the European Union wondering what went wrong.
EU Justice Commissioner Vera Jourova called the scandal “shocking,” and said she’s planning to meet with the finance minister of Denmark, on October 2 to discuss the case.

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