Danske airs dirty laundry; Simon spinoff

Receiving Wide Coverage ...

New estimate
Danske Bank released a report Wednesday that pegs the amount laundered at its tiny Estonian branch at more than $230 billion, $80 billion more than previous estimates and nearly equivalent to the size of the Danish economy. “The sheer size of the cited sums points to Danske Bank being the nexus of a colossal pipeline for carrying illicit money out of Russia and other former Soviet states,” the Wall Street Journal says.

Freya Ingrid Morales/Bloomberg

The report, which was commissioned and paid for by a Danish law firm, found that Danske, Denmark’s largest bank, “was not sufficiently effective in preventing the branch in Estonia from being used for money laundering.” Wall Street Journal here and here, Financial Times, New York Times here and here

The Danish government said the bank faces a fine of as much as $630 million if found guilty for its role in the scandal.

Goldman selling Simon
Goldman Sachs is close to a deal to sell Simon, its three-year-old app that sells complex investment products. Bidders for stakes in the operation included some of the world’s biggest banks and Prudential Financial. The prospective deal is Goldman’s “latest bid to profit from its internal technology.” The Simon app connects banks looking to sell structured notes with retail brokers looking to buy them.

Separately, Goldman Sachs is promoting technology banker Dan Dees to co-head of its global investment banking unit, “the latest of a series of changes before David Solomon takes over as chief executive on October 1.” Dees succeeds John Waldron, who was named president last week.

Lloyd Blankfein will be leaving Goldman “on a high note” after the bank “vaulted past” Citigroup to regain the number two spot on the list of biggest investment banks by revenue, behind only JPMorgan Chase, which has held the top spot every year since 2010. “Goldman’s rebound follows a bruising 2017, when bond trading and commodities saw lower client activity and trading losses.”

Breaking up is hard to do
Deutsche Bank's former head of mergers and acquisitions in the Americas recommended earlier this year that the bank consider breaking itself up. The proposal came from Charlie Dupree, who left in June for JPMorgan Chase. While the bank didn’t follow up on the proposal, “the recommendations from a top deal-maker who had been with the bank since 2006 indicate how deep a rut Deutsche Bank is in.”

Meanwhile, Deutsche Bank is trying to regain its footing by targeting its home turf in Germany, but faces fierce competition there.

A better bitcoin?
David Chaum, “the godfather of the cryptocurrency movement” who created his own digital currency more than 10 years before bitcoin was born, plans to unveil a platform on Thursday he claims “would allow digital cash to be traded almost as quickly as physical cash.” The platform, called Elixxir, “can process thousands of transactions a second — a dramatic increase over bitcoin’s current capability — and cuts down on the energy required to maintain the network,” Chaum claims.

Hackers are generating illegal versions of bitcoin and other cryptocurrencies by using a software flaw leaked by the U.S. government last year. Cyber criminals are using Eternal Blue, a tool “that was used to exploit vulnerabilities in outdated Microsoft Systems software. A previously unknown flaw in the software is now the basis of some hackers’ efforts to commandeer computing power of others to generate digital currency.”

Wall Street Journal

Greener pastures
Bank of America said Christian Meissner, its corporate and investment banking head who was “largely responsible for reshaping the unit following [the bank’s] financial-crisis merger with Merrill Lynch,” is leaving the bank after nearly seven years in the role. He is expected to be replaced by Matthew Koder, currently the bank’s Asia-Pacific president.

Separately, the bank said it will pay $30 million to settle Commodity Futures Trading Commission charges that it tried to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix, or ISDAfix. The agency said the settlement with BofA is its ninth enforcement action involving the benchmark and second in two days.

Selected
President Trump will nominate Nellie Liang, a former Federal Reserve economist who created its financial stability committee, to the Fed Board of Governors. Liang, a registered Democrat, joined the Fed in 1986 and left last year to join the Brookings Institution. Her nomination means the president has picked candidates for all the current vacancies on the Board. Votes in the full Senate have yet to be scheduled on Marvin Goodfriend's nomination, which stalled after a rocky hearing, or Michelle Bowman's candidacy.

Quotable

“This is a scandal of enormous proportions. We are talking about a country that has the reputation of being one of the cleanest in the world. And this is their largest bank.” — Karel Lannoo, chief executive of the Center for European Policy Studies, about Danske Bank's money laundering issues.