Nordic Banks Pinched by Anti-Money-Laundering Compliance Costs
18 Julio 2019 - 5:02PM
Noticias Dow Jones
By Kristin Broughton
Efforts to improve anti-money-laundering controls continue to
weigh on the financial results of Nordic banks, which have faced
allegations in recent months of moving dirty money.
The region's largest lenders -- Swedbank AB, Nordea Bank ABP and
Danske Bank A/S -- said this week that investments in new
compliance systems and staff members have taken a bite out of
quarterly profits. The banks have been swept up in the wave of
crises over alleged compliance lapses that have rocked Europe's
banking sector.
The uptick in compliance spending comes at a tricky time, as
lenders across the continent face an outlook for lower interest
rates and uncertainty surrounding the U.K.'s planned exit from the
European Union.
"The banks in my view that will be successful in the future are
the banks that tackle compliance issues head on," said Chris
Vogelzang, Danske's chief executive, during the bank's quarterly
call Thursday.
Mr. Vogelzang took the helm at Danske in May. Danske revealed
last September that more than $230 billion in suspicious funds,
mostly from Russia, flowed through a small branch in Estonia. The
bank faces a series of probes related to those transactions.
Investments in additional compliance staff and technology pushed
quarterly expenses higher, and will continue to do so in the months
ahead, executives said.
Danske's operating costs during the first six months of 2019
rose 12% from a year earlier, to 12.8 billion Danish kroner ($1.9
billion).
Its core banking business will continue to face pressure while
the "overhang of regulatory investigations persists," Richard
Smith, an analyst with Keefe, Bruyette & Woods, said in a
research note to clients Thursday. Second-quarter profit at the
Copenhagen lender slid 7% from a year earlier.
Nordea said Thursday it plans to review its financial targets,
including its dividend policy, given the pressures the Helsinki
bank faces on a number of fronts, including the cost of improving
its compliance systems.
Nordea's Danish headquarters were searched last month by the
Danish Prosecution Service as part of a probe, launched in 2015,
into possible money-laundering violations.
Nordea's spending on compliance systems has recently stabilized,
after years of ramping up, CEO Casper von Koskull said during an
earnings call Thursday. The bank, however, is looking at ways to
improve compliance efficiency through automation.
"We were behind the game in the beginning," Mr. von Koskull
said. "But now I think we are partly ahead of the game, at least
compared to some."
Swedbank -- whose CEO was ousted in March after police raided
its headquarters as part of a money-laundering probe -- said
Wednesday that expenses rose 12% from a year earlier, mostly from
investments in compliance, as well as an investigation by an
external law firm into previous lapses.
Anders Karlsson, interim CEO of the Stockholm lender, said the
bank has identified weaknesses in its processes for screening
transactions for criminal activity and conducting due-diligence
investigations on its customers.
"I am not in a position, and I don't think any other CEO of any
bank would be in a position, to say that everything looks dandy
today," he said during an earnings call Wednesday.
Dominic Chopping contributed to this article.
Write to Kristin Broughton at Kristin.Broughton@wsj.com
(END) Dow Jones Newswires
July 18, 2019 17:47 ET (21:47 GMT)
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