DNKEY Danske Bank AVS (PK)

   By Sabela Ojea 
 

Danske Bank AS (DANSKE.KO) on Thursday said it has implemented a hiring freeze across the bank's units as it grapples with a low interest-rate environment and rising costs related to battling financial crime.

"As we said earlier this year, our costs have risen, especially in connection with expenses related to fighting money laundering and financial crime, and we are, as all banks, challenged by low rates, low margins and challenges related to digital transformation," a spokesman said.

The Danish bank, which has said it would spend up to 2 billion Danish kroner ($294 million) in compliance costs over a three-year period, clarified that business-critical roles wouldn't be affected by the freeze. The bank didn't specify how long the hiring freeze would last.

Danske Bank is being investigated by authorities in the U.S. and Europe for allegedly facilitating the laundering of about 200 billion euros ($219.5 billion) to at least 15,000 non-Estonia residents--primarily Russians and Azerbaijanis--through its branch in Tallinn between 2007 and 2015.

The Danish bank has admitted there were "major deficiencies in controls and governance that made it possible to use Danske Bank's branch in Estonia for criminal activities such as money laundering."

The bank has also said that its reaction to a 2014 whistleblower relating to the Estonian branch was "manifestly insufficient and inadequate."

The Estonian Financial Supervision Authority prohibited Danske Bank from operating in Estonia in February, and the bank ceased its operations in Russia, Latvia and Lithuania, too.

Last month, former Chief Executive of Danske Bank's Estonian branch Aivar Rehe was found dead near his home. Mr. Rehe headed the branch in Estonia between 2006 and 2015.

Write to Sabela Ojea at sabela.ojea@wsj.com

(END) Dow Jones Newswires

October 10, 2019 11:59 ET (15:59 GMT)

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