Danske Bank reaches coordinated resolutions with the US and Danish authorities regarding the Estonia matter

13 Dec 2022 20:20 CET

Company announcement no 18 2022   Danske Bank A/S
Holmens Kanal 2 - 12
DK - 1092 København K
Tel. +45 45 14 00 00





13 December 2022

This company announcement replaces company announcement no. 16 of 13 December
2022 to include an updated quote from the Chairman of the Board of Directors,
Martin Blessing.


* Danske Bank has reached final coordinated resolutions with the US Department
of Justice (DoJ), the US Securities and Exchange Commission (SEC) and the
Danish Special Crime Unit (SCU) following the investigations into failings
and misconduct related to the non-resident portfolio at Danske Bank's former
Estonia branch
* Danske Bank fully accepts the findings and apologises unreservedly for the
unacceptable historical failings and misconduct, which have no place at
Danske Bank today
* Danske Bank has cooperated with all investigations, which have resulted in a
total settlement of DKK 15.3 billion, covered by the provisions booked in
the third quarters of 2018 and 2022, respectively
* The financial impact was further provisioned for in connection with our
financial results for the third quarter of 2022, and the resolutions
announced today conclude the investigations into Danske Bank by the DOJ, SEC
and SCU
* Danske Bank has taken extensive remediation action to address those failings
to prevent any repeat, including new leadership and significant investments
in systems, controls and competencies to fight financial crime

Danske Bank has reached resolutions with the DoJ, the SEC and the Danish SCU
following the investigations in relation to the non-resident portfolio at Danske
Bank's former Estonia branch.

In relation to the resolutions with the U.S. authorities, Danske Bank has
pleaded guilty to a criminal charge from DoJ of conspiracy to commit bank fraud,
which has today been approved by a U.S. District Court. Furthermore, Danske Bank
has agreed to settle a civil securities fraud action with the SEC.

Under the SCU resolution, Danske Bank has agreed to accept a fine and
confiscation for violations of the Danish AML Act and the Danish Financial
Business Act.

The aggregate amounts payable to the US and Danish authorities total USD 2.06
billion (~ DKK 15.3 billion - hedged following the provision) and is comprised
of forfeiture, fine, disgorgement and confiscation. This is covered by the
provisions booked in connection with our financial results for the third quarter
of 2022 and the third quarter of 2018. Reflecting cross-crediting arrangements
between the three authorities as well as currency conversions, the amounts
payable to the authorities are as follows:

* DoJ: USD 1,209 million
* SEC: USD 178.6 million
* SCU: DKK 4,749 million

Danske Bank accepts and agrees to the terms of the resolutions, and as a result
of the resolutions, the investigations by U.S. and Danish authorities are now
closed as to Danske Bank. As part of Danske Bank's plea agreement with the DOJ,
Danske Bank will be placed on probation for three years. Since learning of the
investigations, Danske Bank has cooperated with the DoJ, SEC, and SCU.
Furthermore, as ordered by the Danish FSA, Danske Bank has an independent expert
monitoring the implementation of its financial crime plan, and in consequence,
the DoJ has not imposed its monitor at this point in time.

"The resolutions mark the end of the investigations into Danske Bank by US and
Danish authorities. We have cooperated since we were approached by the
authorities and accept the terms of the resolutions. We offer our unreserved
apology and take full responsibility for the unacceptable failures and
misconduct of the past, which have no place at Danske Bank today. We have learnt
from our mistakes and we have taken the steps necessary to ensure that Danske
Bank has robust measures in place to do everything possible to prevent these
failures taking place again," says Martin Blessing, Chairman of the Board of
Directors.

Fighting financial crime is a key priority
The fight against financial crime is a key priority for Danske Bank. Danske Bank
has made significant investments to ensure that a robust, well-resourced and
expert compliance function is in place across our operations to effectively
combat financial crime. The actions taken include the following:

All banking operations in the Baltic countries ceased in 2019: Danske Bank
closed down all its banking activities in the Baltic countries and in Russia in
February 2019 in order to focus its efforts on supporting the economies and
communities in its core Nordic markets.

Building a strong compliance culture: This includes a considerable expansion of
internal training in anti-money laundering measures, building a new compliance
culture and mandatory whistleblower training as well as implementing risk
management and compliance in the performance agreements of all members of the
Executive Leadership Team and relevant senior managers. This cultural
development, which among other things is cultivated through a clear tone from
the top, is also aimed at fostering a shared mindset under which employees
always think about doing the right business with the right people in the right
way.

Investments into employees and new IT systems: From 2018 and until the end of
2022, Danske Bank will have invested approximately DKK 12 billion (approximately
EUR 1.6 billion) in maintaining and improving the overall financial crime risk
management framework, including AML controls, and we will continue to invest in
this area. During this period of significant remediation, we have allocated
considerable resources to this work, and today, Danske Bank has 3,600 full-time
employees working to fight financial crime.

Strengthened organisation and updated procedures: Danske Bank has introduced new
initiatives and procedures designed to ensure that indications of potentially
problematic issues are investigated appropriately to strive for transparency and
completeness in Danske Bank's interaction with the supervisory authorities and
timely and accurate reporting. Danske Bank has also strengthened the processes
of preparing and approving public disclosures made by Danske Bank ensuring
improved controls and risk management. Furthermore, we have introduced a control
framework dedicated to strengthening the accuracy of representations made to our
correspondent banking partners.

"At Danske Bank we have taken significant learnings from the regrettable
failures of the past. Our focus has been on systematically addressing the root
causes that led to these unacceptable breaches of everything we want to stand
for as a bank. We have made significant investments in building systems and
upgrading our compliance, risk and control capabilities, and we are actively
nurturing a culture under which employees can speak up if they see actions that
may not meet our standards.

The financial impact communicated in connection with our financial results for
the first nine months of 2022 provided clarity for Danske Bank's employees, our
customers and our investors, and with the resolutions today, we are now able to
provide full clarity and a conclusion to the investigations relating to the
Estonia case," says Carsten Egeriis, CEO of Danske Bank, and continues:

"Our transformative change, both at an operational and at a cultural level, has
moved us to a much stronger position today. We are focused on preventing these
deeply regrettable failures from ever happening again and delivering on our
longer-term strategic objectives with expert advisory services, strong digital
solutions and sustainable finance at the core of our business."

Financial and capital-related implications
As previously communicated in connection with our financial results for the
first nine months of 2022, the Board of Directors decided to cancel the
remaining dividend for 2021, and the Board of Directors will propose to the
annual general meeting that no dividend be paid out for 2022. As at the end of
the third quarter of 2022, Danske Bank remained sufficiently capitalised, also
for upcoming regulatory capital requirements, with a CET1 capital ratio of
16.9%.

The financial outlook for 2022 has been adjusted. Due to the impact of the final
settlement amount, we now expect a net loss better than DKK 5.3 billion.

For our 2023 financial ambitions, we maintain our ambition of a return on equity
of 8.5 to 9 percent in 2023, however, now at the upper end of the range.

Specific guidance for 2023 will be provided in connection with the Annual Report
for 2022 on 2 February 2023.

About the legal process
The plea agreement reached with the DoJ has been approved by the U.S. District
Court. Sentencing will take place at a later date.

The SEC complaint will be filed with the U.S. District Court and will await
entry of the agreed final judgment in accordance with the written consent of
Danske Bank.

The agreement with the SCU will form the basis for a hearing at the City Court
of Copenhagen (to be scheduled) at which Danske Bank will accept the charges,
the fine and the confiscation.

As we have stated previously, Danske Bank remains subject to ongoing civil
litigations, which are not included in today's resolutions. Danske Bank will
continue to vigorously defend itself against these claims.

More information

* Read the full resolution from the U.S. Department of Justice here:
https://danskebank.com/-/media/danske-bank-com/file-cloud/2022/12/doj-plea-
agreement-and-information.pdf
* Read the full resolution from the Danish Special Crime Unit here:
https://danskebank.com/-/media/danske-bank-com/file-cloud/2022/12/scu-fine-
notice-eng.pdf
* Read more about the Estonia case here: https://www.danskebank.com/about-
us/corporate-governance/resolution-in-terms-of-the-estonia-matter
* Read more about Danske Bank's efforts to fight financial crime here:
https://danskebank.com/about-us/corporate-governance/compliance/fighting-
financial-crime


Danske Bank

Contact: Stefan Singh Kailay, Head of Media Relations, tel. +45 45 14 14 00

More information:
Access the news on Oslo Bors NewsWeb site

578094_DOJ Plea Agreement and Information.pdf
578094_SCU Fine Notice_ENG.pdf
578094_Company announcement no 18 2022.pdf