Well, that escalated quickly. Someone has pulled the curtain back on the business model behind Scandanavia's top banks, and it doesn't look pretty back there. Recall briefly that last year investigators uncovered the as-yet largest money laundering scheme ever: $200 billion had flowed out of Russia and former Soviet states through Danske Bank, with a good chunk of that ending up in high-end London properties. Danske chief executive Thomas Borgen was soon out the door, but not without resisting. Borgen previously had oversight of the Estonian branch that channelled most of the money. Now Swedbank and its chief executive Birgitte Bonneson have joined the battle to see who did it best/worst. Plucky Swedbank is headed for major grief.
Like Borgen at Danske, Bonneson ran the bank's Baltic operation before becoming chief executive. When news emerged that Swedbank may be embroiled in money laundering, the bank called in EY to investigate. That only lasted a few days, and Swedbank was forced to replace EY with a forensic investigator. (EY incidentally was the auditor for Dankse Bank.) But it's what happened in the interim that is going to do for Bonnesen.
A week ago, on 20 February, the Swedish broadcaster SVT ran a program on Swedbank, alleging that the bank had helped to transfer over four billion dollars in illicit funds from Dankse Bank. Reaction to the news wiped a fifth off the bank's shares last week. Then Swedish newspaper Dagens Nyheter broke an even more sensational story, alleging that the bank's main shareholders had been briefed on the SVT investigation two days before the programme was aired.
Now Swedish investigators are looking to see if the bank passed insider information to its fifteen biggest shareholders. "BlackRock and Vanguard may be among the 15 biggest shareholders in Swedbank under investigation by the Swedish Economic Crime Authority (Ekobrottsmyndigeheten), following press reports that this group of investors benefitted from insider information linked to a money laundering scandal that has engulfed the financial group in the past week," reports Investment Europe. Thomas Langrot, the lead prosecutor for the Economic Crime Authority, is beginning the investigation this week. "This follows publication of an article in Swedish newspaper Dagens Nyheter that Swedbank's biggest shareholders were given advance information about the money laundering scandal and allegations therein, which were highlighted in Swedish current affairs television programme Uppdrag granskning last week." To stay briefing on this story, check out this Twitter thread.
Attending Money2020 means wandering through the forest of exhibition stalls and booths to get to the food hall, and sometimes wondering if one is at the right exhibition. The Earthport stall looked like an intergalactic flight booking booth, with the Earth as the main hub. Turns out that's pretty much its model. Instead of using the standard "network" of banks to send money, Earthport acts as a hub that all money flows to and from, avoiding fees from a set of correspondent banks. Now Visa and Mastercard are in a fight to get on board. But what precisely do they see in the Earthport? "Given that the cross-border business is a very lucrative business for the card networks (5-6x the economics to the card networks relative to domestic transaction) and its ability to facilitate payments for businesses, Earthport fits with V and MA's desire to expand this high margin business in the context of B2B and B2C," writes Moshe Orenbuch at Credit Suisse. "Earthport's challenges to gain scale also make its alignment with a larger player logical." What does seem clear is that no single model has yet emerged as a winner-takes-all type contender.
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