Danske Bank A/S is continuing its own internal investigation into allegations of money laundering at its Estonian unit, CEO Thomas Borgen told analysts during the lender's full-year 2017 earnings call.
In October 2017, the Tribunal de Grande Instance de Paris placed Danske Bank under investigation with regard to €15 million that were transferred to France by its clients in Estonia between 2008 and 2011. The French authorities' official probe into the bank's activities concluded in January, with the lender's status in the probe being changed to that of an assisted witness.
Yet Danske Bank wants to ensure that any necessary lessons have been learned.
"We are doing this to ensure that we learn from any mistakes that might have taken place, so that they will not be repeated," Borgen said. "This is very unfortunate and unacceptable, but we are taking necessary measures."
Impairments, IT spending expected to rise
During the Feb. 2 call, CFO Jacob Aarup-Andersen also warned that impairments and IT spending were both likely to increase in 2018. He said impairments would rise after January's introduction of IFRS 9 rules, which change the way that banks account for anticipated future loan losses.
"Impairments will be low, but they will be higher in 2018," he said, adding: "It's too early to guide any further."
Loan impairments for 2017 rose to 873 million Danish kroner, up from 3 million kroner in 2016.
Analysts can also expect a higher level of spending in the areas of IT and regulatory compliance in the coming year, according to Aarup-Andersen.
"We have maintained a very strong cost discipline for the past five years, reducing absolute costs, and will continue on that account in the coming years," he said. "We will continue to invest heavily in delivering on all the key regulatory projects: Mifid II, data protection etc. These drive IT costs, staff costs and consultants as a prerequisite. We will also continue to invest heavily in the digitization agenda."
Overall, Danske Bank made a net profit of 20.90 billion kroner in 2017, up from 19.86 billion kroner a year earlier.
Earlier on Feb. 2, Aarup-Andersen had told S&P Global Market Intelligence that Danske expects to grow its mortgage portfolio in the Nordics despite a recent slump in house prices across the region.
As of Feb. 1, US$1 was equivalent to 5.97 Danish kroner.
