March 12, 2019 / 3:46 PM / a year ago

Proxy advisor PIRC urges investors to oppose split of Danske Bank

(Reuters) - Leading proxy voting adviser Pensions & Investment Research Consultants (PIRC) recommended on Tuesday that investors in scandal-hit Danske Bank oppose a resolution to break up the lender at its annual general meeting this month.

FILE PHOTO: General view of the Danske Bank building in Copenhagen, Denmark, September 27, 2018. REUTERS/Jacob Gronholt-Pedersen/File Photo *** Local Caption *** Jacob Gronholt-Pedersen

Danske is under investigation in the United States, Denmark, Estonia, France and Britain over 200 billion euros (171.2 billion pounds) in payments from Russia, ex-Soviet states and elsewhere that were found to have flowed through its Estonian unit.

A split of the bank was suggested by shareholder Frank Aaen, an economist and a member of the Danish parliament for the Red-Green Alliance, a left-wing political party, PIRC said on Tuesday.

Aaen also chairs an investor group which allows him a mandate to ask tough questions and make radical proposals at shareholder meetings of large Danish listed companies.

PIRC said that the size of the bank helps it to meet the financial needs of large Danish businesses and asset managers.

“In addition, the universal business model helps the company to be resilient and flexible in the case of financial crisis,” PIRC said in a statement.

A split could result in the formation of two limited liability companies with their own independent management and include all banking activities, ensuring no company has total assets in excess of 20 percent of Denmark’s gross domestic product, PIRC said.

Danske has said the split would not benefit society, customers or shareholders, PIRC added.

PIRC also urged investors to vote for a resolution instructing Danske’s board to look into claiming damages from some members of the audit committee, risk committee and executive board.

The damage claims would centre on either criminal offences or incompetence of committee members and Danske’s board during the years 2012 through 2017.

Danske Bank’s former Chief Executive Officer Thomas Borgen resigned in September after an investigation revealed payments through Danske’s small Estonian branch, many of which the bank said were suspicious.

Reporting by Noor Zainab Hussain in Bengaluru and additional reporting by Jacob Gronholt-Pedersen in Copenhagen; Editing by Jan Harvey and Susan Fenton

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