Estonia, Financial Services, Lithuania

Starting from October 2019, all credit agreements of business customers will be serviced through the Lithuania branch of Danske Bank A/S. The transfer comprises customer data and related agreements, including all valid Danske eBank agreements.

The agreements remain valid under the current terms and conditions, so that only the credit servicing account will change.

Until Oct. 1, customers may use either the existing credit servicing account in Danske Bank A/S Estonia branch or the newly opened credit servicing account in Danske Bank A/S Lithuania branch.

After Oct. 1, only the credit servicing account in Danske Bank A/S Lithuania branch will remain valid.

In the course of September, customers will receive more specific information on the agreements and services transfer.

Danske Bank informed at the beginning of June that it will not sell the portfolio of loans issued to Estonian businesses, the volume of which stood at 549 mln euros at the start of the year. It said the model for servicing corporate loans will be determined over the summer months.

That means that Danske is to have its corporate loan portfolio run off so that all contracts are served until their expiry date, which is consistent with a precept issued by the Financial Supervision Authority.

Previously Danske Bank had announced that it is to sell its unit involved with Estonian private loans to LHV Pank, banking arm of listed Estonian financial services group LHV Group.

LHV Pank announced in June that it is about to acquire for 410 mln euros Danske Bank's unit involved with Estonian private loans. The volume of the loan portfolio of the unit as of the end of February was 470 mln euros, about 97% of which was home loans.

The volume of assets of Danske Bank's Estonian branch stood at 1.2 bn euros at the start of the year.

The majority of Danske's assets consists of issued loans, the portfolio volume of which is 1.06 bn euros, which is 5.45% of Estonia's market share. Of this, 501 mln euros are loans of private persons and 549 mln euros are loans issued to legal persons, according to data available from the Financial Supervision Authority.

The Estonian Financial Supervision Authority on issued a precept to Danske Bank in February prohibiting the branch of the bank from operating in Estonia.

The bank must cease its activities in Estonia within eight months from receipt of the precept, and it must consider the interests of its current customers in doing so, the financial watchdog said.

It has been claimed that some 200 bn euros, the bulk of which appears to have come from uncertain sources, was channeled through Danske's Estonian branch between 2007 and 2015.

Thomas F. Borgen, then CEO of Danske Bank, in September of 2018 decided to resign from his post due to the bank's money laundering scandal. In addition, rules and control mechanisms pertaining to the financial sector have come under closer scrutiny in many places across the European Union.

Due to the money laundering scandal, Danske is under investigation in Denmark, Estonia, France, Germany, the United Kingdom and the United States.