Picture. REUTERS/CHRIS HELGREN
Picture. REUTERS/CHRIS HELGREN

Stockholm — The prospect that another big Nordic bank will be dragged into the widening scandal over money laundering in the Baltics rattled investors on Friday.

Shares of Sweden’s SEB plunged the most since the peak of the financial crisis after the bank said it was contacted by SVT, the nation’s public broadcaster, on plans to include it in a programme about dirty money. The disclosure lopped as much as 15% from SEB’s market value and hit its bonds.

SEB, like Swedbank, has broad operations in the Baltic region, and SVT has been at the forefront of allegations that Swedbank’s operations there were linked to the Danske Bank money-laundering scandal that involved hundreds of billions of dollars in suspicious transactions originating mainly in Russia.

Swedbank is under investigation in Sweden, Estonia, Latvia and the US, and, in March, fired its CEO following the SVT reports. Estonia expelled Danske Bank earlier this year. SEB has not been implicated in the scandal.

In its statement Friday, Stockholm-based SEB said it had received questions from reporters at SVT’s Uppdrag Granskning TV programme. The bank said it had no further knowledge of the programme’s content.

“In order to be transparent, SEB chooses to disclose this information to the market,” it said. In a statement on November 7, Swedbank said it, too, was contacted by SVT for a programme that would air on November 20.

What Bloomberg Intelligence says

According to BI banking analyst Philip Richards, SEB has been dragged into the long-running scandal over Baltic dirty money, with Sveriges Television set to air allegations of violations against the bank. While it’s impossible at this stage to assess the accuracy of those claims, the experience of Danske Bank (share price down 60% since its 2018 peak) and Swedbank (down 35%) will spook investors. SEB has a sizable presence in Baltic markets, deriving 10% of revenue from the region.

“SEB is being pulled deeper into the Baltic money-laundering swamp,” Joakim Bornold, a savings adviser at Söderberg & Partners in Stockholm, said in an e-mailed comment. “The share price fall, however, feels like an overreaction. The price drop should probably not be regarded as concern about the new information but rather about uncertainty regarding the magnitude of it.”

SEB’s $900m CoCo bond, issued less than three weeks ago, fell about 1.5c to about 98c on the news. While it’s too early to draw conclusions from the SVT news, “there could be more volatility ahead for SEB’s bondholders”, said Vaclav Vacikar, a credit analyst at Rabobank. CoCos are the riskiest form of bank debt.

The bank said it will “take action immediately” if new information warrants it. “For a long time, SEB has worked hard to ensure it has adequate routines and processes to prevent money laundering,” the bank said. “However, just like any other bank, SEB cannot guarantee that it has not been used, nor that SEB will not be used” for illicit activity.

SEB CEO Johan Torgeby has said repeatedly that the bank found no indications that it has “systematically” been used for money laundering.

With Leo Laikola

Bloomberg