MP Pension Head Wants Danske Bank CEO Gone ASAP

The head of one of Denmark’s big pension funds is demanding the CEO of Danske Bank, who has announced his resignation, leave immediately rather than stay on until a replacement is found—due to the money-laundering scandal that caused his exit.

CEO Thomas Borgen tendered his resignation last week, the same day the $548.7 billion organization published an internal report on a yearlong money laundering scandal at its Estonian branch. When he announced his departure, Borgen took responsibility, admitting that his bank possibly helped launder most of the €200 billion ($235 billion) in one of Europe’s worst such scandals.

Following Borgen’s announcement, Danske said it would allow him to keep his job until a new chief takes over.

This did not sit well with Jens Munch Holst, chief executive of the $17.9 billion MP Pension, which invests on behalf of Denmark’s public colleges and schools.

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“We have confidence that Danske Bank will safeguard itself as well as possible against money laundering in the future… But we don’t understand how the director Thomas Borgen can still turn up at Danske Bank,” he told IPE.com.

“He must stop immediately,” Holst continued. “Anything else is incomprehensible and unsatisfactory.”

MP Pension holds about $94.5 million in Danske Bank shares, but has “quarantined” the company since July due to the scandal. That means the fund can’t currently add to holdings in Danske. Nevertheless, Holst stressed that the bank and its other areas of business are run well, and that divestment would not be a good move as Danske Bank “is important for the whole of Danish society.”

Last year, Danske began investigating its Estonian branch amid suspicions that several billion kroner were laundered between 2007 and 2015. The report found possible collusion between staff and customers on questionable transactions involving some 15,000 customers, a non-residential portfolio, and about €200 billion worth of payments. The bank found the latter to be the most suspicious element.

“There is no doubt that the problems related to the Estonian branch were much bigger than anticipated when we initiated the investigations,” Danske Bank said in a statement regarding the investigation. “The findings of the investigations point to some very unacceptable and unpleasant matters at our Estonian branch, and they also point to the fact that a number of controls at the Group level were inadequate in relation to Estonia.”

Sources close to the Bank told Danish news outlet Finans it is “close” to replacing Borgen, hinting that a candidate was awaiting board approval.

Tags: Danske Bank, Denmark, Jens Munch Holst, Money Laundering, MP Pension, Thomas Borgen

Although more than 60% of investors and nearly 50% of issuers worldwide have an environment, social, and governance (ESG) plan in place, these rates vary widely based on region, according to a report from HSBC, which also found that disclosure of ESG strategy and policy still has a long way to go.

According to HSBC’s research, ESG financial instrument penetration among issuers is 79% worldwide, however, there is a significant variance across regions. For example, it found that Hong Kong reported a penetration of 59.8%, while the UK had a penetration of 92.9%. On the investor side, penetration was lower across the board, with 65.6% involved in ESG investing worldwide. As with financial instrument penetration, there was also a wide disparity based on geography, with Asia recording the lowest level of penetration at 43.3%, including just 38.4% of Chinese investors reporting ESG investments.

The report found a much higher proportion of issuers involved in creating the ESG instruments than investors who invest in them. This gap is most notable in China, where 90.5% of issuers are using ESG financing, compared to only 38.4% of investors who have ESG investments. However, the gap is far narrower in Europe where 92.4% of issuers have ESG financing with 89.2% of investors involved.

HSBC said investors cited a lack of opportunity as the main reason they are not increasing their ESG investments, while issuers said they are not increasing ESG financing because of low investor demand.

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The report also said that “disclosure of ESG strategy and policy is very much an ongoing ‘work in progress,’” adding that 52.4% of issuers and 38.6% of investors worldwide do not even have an ESG Strategy.

“In terms of ESG policy, we see a less transparent approach with 68.8% of issuers and 66.7% of investors not disclosing their policies,” said the report. “There are exceptions led by Europe, pension funds, and sovereign wealth funds in the UK and the Gulf States, but even in these markets there is a high level of overall non-disclosure.”

HSBC expects ESG investing to continue to increase globally, and said that although less than 10% of investors currently have dedicated ESG investment structures, they forecast this to grow by 20% over the next 12 months.

It added that regulation, financial returns, and shareholder pressure, or risk of negative publicity, are the main drivers that will help push the industry to work toward full disclosure and transparency.

Tags: Disclosure, ESG, HSBC, Strategy