–
Almost all European bank stocks went into depth on Monday, now that the leaked FinCEN files highlight how hard-learning the sector is in the fight against money laundering. “You would almost feel sorry for the new CEO of ING.”
–
Low interest rates, rising credit losses and lost dividends already made banks not among the hottest boys in the class on European stock exchanges. But now that new leaked documents from the US money laundering cell – the Financial Crimes Enforcement Network or FinCEN – show that the sector continued to process at least $ 2,000 billion in suspicious cash flows between 1999 and 2017, the fence was completely off on Monday.
–
Investors threw out their bank shares en masse. The Stoxx600 bank index, the stock market basket with the most important bank stocks in the eurozone, was up 5.7 percent. It was the biggest blow to the banking index since late July.
–
Fear of stricter approach
The biggest losers were Deutsche Bank (-8%), the French Natixis (-7.6%) and especially ING. The Dutch bank lost 9.5 percent and had its worst day since mid-March.
–
Investors threw their bank stocks out because they fear governments and regulators would keep the sector tighter after the publication of the FinCEN Files.
–
–
After several scandals, numerous banks have had to cough up hefty fines and invest in stricter money laundering checks in recent years. But from the documents that leaked last weekend, it can be deduced that many institutions are stubborn, despite the sometimes sky-high fines.
–
For example, the British HSBC made it possible that fraudsters could transfer the proceeds of a pyramid scheme between 2013 and 2014 for another two years from the US to Hong Kong. That happened shortly after that bank in the United States had to cough up a fine of 1.9 billion dollars for condoning money laundering. Clearly, the allegation was too much for investors: they pushed HSBC stock to its lowest level in more than 20 years during the day.
–
Polish concerns for ING
Closer to home, ING appears to play a prominent role in the FinCEN Files. The leaked documents show that ING’s Polish subsidiary has helped customers channel hundreds of millions out of Russia. Via mirror trading, whereby securities in one currency are simultaneously bought and sold in another currency, the Polish subsidiary is said to have shipped 675 million euros to Danske Bank in Estonia. Mirror trading is not illegal in itself, but banks must comply with very strict anti-money laundering guidelines. The facts are said to date back to 2014, but have only now come to light.
–
–
Just when you think a page has been turned, a money laundering file pops up. After the Netherlands and Italy, this time it will be Poland’s turn. ‘
Jason Kalamboussis
bankenanalist KBC Securities
–
–
–
In Belgium, ING was also fined last year by the National Bank for violations of anti-money laundering legislation. Since last year, KYC or ‘Know Your Customer’, the legal obligation for banks to know their customers and the origin of their money, has been a priority at ING in Belgium. Since last year, no fewer than 2,500 people have been meticulously researching all customer files and calling on customers to submit missing data.
–
New CEO
The fact that the FinCEN Files are just now coming out is quite embarrassing. Certainly because ING CEO Steven van Rijswijk, who took over the torch from Ralph Hamers earlier this year, is just the man who, as head of risk management, has drastically patched the control mechanisms at the bank.
–
“You would almost feel sorry for the new CEO,” says KBC Securities analyst Jason Kalamboussis. ‘Just when you think a page has been turned, a money laundering file pops up. After the Netherlands and Italy, this time it will be Poland’s turn. ‘ Kalamboussis is confident that ING has now considerably refined its internal control system. ‘What you can expect is that the file will get an extension in Poland. Just like in Italy, a possible fine is probably a side issue there. What has done more damage there is that the group was unable to take on new customers there for a long time. So it remains to be seen what the next steps are. ‘
–
–
