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Swedbank behind 40b kronor in suspect transfers: report

It has become the latest Nordic lender to face allegations that it was used to launder money

Stockholm

THE biggest bank operating in the Baltic region, Swedbank AB of Sweden, has become the latest Nordic lender to face allegations that it was used to launder money.

Its shares fell as much as 7.3 per cent after the market opened in Stockholm on Wednesday.

Swedish broadcaster SVT alleges that some 50 customers at Swedbank, who all displayed "clear warning signals regarding suspected money laundering", transferred about 40 billion kronor (S$5.8 billion) between the Stockholm-based lender and Danske Bank A/S from 2007 to 2015. Swedbank spokesman Gabriel Francke Rodau said the lender has identified suspicious transactions that it has reported to the police. He also said the bank doesn't recognise the numbers mentioned by SVT.

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"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."

Swedbank's share-price decline on Wednesday shaved about US$1.5 billion off its market value, representing its worst day since Oct 3. SVT said that the 40 billion kronor in suspicious transactions translates into almost US$6 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.

The development comes as a US$230 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 Wednesday, 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," Mr 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." The revelations of money laundering have reshaped the financial industry across the Nordic and Baltic regions. Danske was on Tuesday kicked out of Estonia, prompting Denmark's biggest lender to announce a complete withdrawal from the entire Baltic region and Russia.

Danske may now be facing billions of dollars in fines as investors await the outcome of a criminal probe in the US. Its share price has plunged about 50 per cent over the past year, wiping more than US$18 billion off its market value as investors expressed shock at the allegations.

Laundering accusations have also been levelled against Nordea Bank. The Nordic region's biggest lender says it's cooperating with the relevant authorities.

SVT said the suspicious Swedbank transfers were made by corporate customers who had no ostensible operations or whose owners are unknown. The companies were based abroad, but had accounts with Swedbank in Estonia, Latvia and Lithuania, SVT said. In the case of Danske, the suspicious transfers were concentrated in non-resident accounts.

Mr Rodau, the Swedbank spokesman, said by phone that the bank has identified suspected money laundering and reported such matters to police.

"When we get signals from our own systems and processes or externally, we take action," he said.

When the bank looks at risk indicators to find potential money laundering, it uses the same method that SVT used for its report, and the bank "doesn't recognise the numbers" that SVT reports, he said. BLOOMBERG