July 18, 2018 / 7:19 AM / a year ago

UPDATE 1-Danske Bank to forgo Estonia money laundering profits, shares fall

* Danske says case dates back to 2007-2015

* Shares fall 7 pct

* Danske Q2 pre-tax below expectations

* Expects 2018 net profit at lower range of forecast (Adds detail on Estonia money laundering case)

By Jacob Gronholt-Pedersen and Stine Jacobsen

COPENHAGEN, July 18 (Reuters) - Danske Bank said on Wednesday it would forgo profits made from suspicious transactions in Estonia once the scale of past money laundering scandal becomes clear.

The bank has launched its own investigation into the case which it said dated back to 2007-2015, after a newspaper report this month said Danske laundered up to $8.3 billion — more than twice the amount previously reported. It is due to present its findings in September.

However, Denmark’s business minister has said the bank’s own investigation might not be enough.

It said this month “the extent appears to be somewhat bigger than what has previously been reported”.

Shares in Danske fell 7 percent at the open to the lowest level since August 2016.

Danske Bank, which has admitted to flaws in its anti-money-laundering controls in Estonia, said gross profits from its non-resident portfolio in Estonia between 2007 and 2015 amounted to 1.5 billion Danish crowns ($234.23 million). It was not clear how much of that amount Danske would waive, it said.

The bank said its board is “determined that Danske Bank should not benefit financially from such suspicious transactions in the Estonian non-resident portfolio”.

“It is Danske Bank’s intention to make the gross income generated from such transactions in the period from 2007 to 2015 available for efforts that support the interest of the societies in which we operate, such as combating international financial crime,” it said in a statement.

Danske on Wednesday posted a fall in second-quarter pre-tax profit which missed forecasts and said net profit for the year would be at the lower end of its forecast range.

Pre-tax profit at Denmark’s biggest lender stood at 5.49 billion crowns for the three months to June 30, down from 6.18 billion a year earlier. Analysts had forecast a profit of 6.02 billion.

The bank said it still expects net profit for the year of between 18 and 20 billion crowns, but that it would likely be at the lower end of that range due to weaker trading income.

Net trading income fell 35 percent to 1.1 billion crowns, undershooting the 1.5 billion expected by analysts, with the bank saying “global uncertainty and investor reticence contributed in particular to a weaker development”. ($1 = 6.4039 Danish crowns) (Reporting by Jacob Gronholt-Pedersen and Stine Jacobsen; editing by Jason Neely and Emelia Sithole-Matarise)

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