Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Investments
May 20, 2019 01:00 AM

Biggest Nordic money managers hoard banks in laundering scandals

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Bloomberg
    Danske Bank, along with Swedbank, is being investigated in Europe and the U.S. for possible money laundering.

    The biggest Nordic asset managers are either holding or increasing stakes in banks dragged down by vast money laundering scandals.

    In a region where the concept of ethical investing is regularly held up as a goal, none of the big institutional investors contacted by Bloomberg said they would consider divesting shares of banks under investigation for laundering. A number have taken advantage of share-price declines to add to existing stakes.

    At the top of the list is Norway's $1 trillion sovereign wealth fund, which this month underlined its intention to remain a long-term investor in the Nordic banks caught up in dirty money affairs. The biggest pension funds in Denmark and Sweden have made similar statements. The funds Bloomberg spoke with said it was their intention to stay invested to take on a more activist role.

    "Of course we take it very seriously," said Eva Halvarsson, the chief executive officer of one of Sweden's biggest pension funds, AP2. "We have shares in all the banks and are also cooperating with them in our role as asset managers. We follow the developments closely and have contacts at various levels."

    "It's important that we wait and see how things develop," she said. "But it's of course in the cards for us to stay active and have a dialogue. They need to explain what they are doing about it and how they see their future."

    Danske Bank and Swedbank are being investigated in Europe and the U.S. amid allegations they handled billions of dollars in dirty money from the former Soviet Union via their Estonian units. Those who reportedly benefited from the transactions include convicted felon Paul Manafort and ousted Ukraine President Viktor Yanukovych, among others. Nordea Bank is also under investigation for laundering, though allegations against it are on a much smaller scale.

    Preliminary charges have already been brought against a number of former Danske executives, including its ousted CEO, Thomas Borgen. Swedbank fired its CEO, Birgitte Bonnesen, amid allegations she misled the public about the severity of the bank's laundering scandal. Bloomberg Intelligence estimates that Danske may be facing a fine of about $1 billion in the U.S., and as much as $500 million from investor lawsuits against it.

    "I have a great understanding for the complexity of it but of course the banks need to take it seriously in order to regain trust," Ms. Halvarsson said.

    ESG investing

    The pension industry's commitment to scandal-hit banks may raise questions around the principles of responsible investing based on environmental, social and governance concerns. ESG investing guidelines aren't standardized, making it hard to know what distinctions money managers are making. At the same time, there's a school of thought that said staying invested in companies involved in unethical behavior is a better way to wield influence than divesting.

    "That's the way we work," said John Howchin, the secretary general of the Council on Ethics that sets guidelines for a number of Sweden's AP pension funds. "We stay and work together with the companies, as long as we think it gives results." In an interview, he said that the ethics council has a global focus, while it's up to the individual funds to take a stance on local investments.

    In Norway, the CEO of the wealth fund, Yngve Slyngstad, said they "have a good dialogue" with the banks under investigation for money laundering. "Even so, we will remain long-term investors and it goes without saying that, as an investor in these banks, we have an expectation that the board will address these issues."

    Buying banks

    Some of the biggest funds in the Nordic region are adding to their stakes in the banks. ATP and PFA, Denmark's two biggest pension firms with a combined portfolio of about $210 billion, have both bought up shares of Danske Bank since the scandal broke. PFA CEO Allan Polack points to the bank's ability to make money as a key consideration. He said PFA is "very pleased" with Danske's commitment to its dividend.

    Analysts seem to agree.

    By far the majority of analysts covering Danske are advising clients to buy or hold on to the stock. Most recently, Barclays upgraded its recommendation on Danske to overweight.

    Finland's Varma Mutual Pension Insurance Co., which manages more than $50 billion, sold its Danske shares in 2018 but tripled its Swedbank stake. Ilmarinen Mutual Pension Insurance Co., another big Finnish fund, also added to its Swedbank holding.

    Institutional investors have mostly stuck around as others have fled. Danske's share price plunged almost 50% last year, while Swedbank is this year's worst-performing financial stock in Europe, having lost roughly a quarter of its value. Nordea fell about 25% last year, broadly in line with the European financial stocks on average.

    The declines have forced Danske and Swedbank to the bottom of the ladder when measuring market values of the six biggest Nordic banks. Nordea remains the region's biggest. But DNB ASA of Norway, which has largely steered clear of laundering scandals, is now the second-biggest Nordic lender.

    Sampo Oyj, Nordea's biggest investor, said it's time to look past the allegations, declaring that the "era of large scandals is over." Sampo Chairman Bjorn Wahlroos, who also used to run the board of Nordea, said earlier this month he's satisfied that the bank has in the meantime allocated as many resources to its anti-money laundering work "as is physically possible."

    Related Articles
    Polaris, Acathia to buy Danica Pension Sweden from Danske Bank
    Union pension fund sues Danske Bank, alleging securities fraud
    Pension funds with $210 billion look past scandal and buy Danske stock
    Institutional investors sue Danske Bank after money laundering, cover-up invest…
    Swedes world-champion savers with 100% stashing cash in funds
    Norway's sovereign wealth fund divests investments in medicinal pot
    AP2 quits holdings in tobacco and nuclear weapons companies
    Recommended for You
    Greg Medcraft
    Search for yield in low-return future dominates conference
    CITIC Capital Partners closes $2.8 billion China buyout fund
    CITIC Capital Partners closes $2.8 billion China buyout fund
    Africa's biggest fund manager sees gold boom in West Africa
    Africa's biggest fund manager sees gold boom in West Africa
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 23, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference