Accusations of cases of price manipulation in 2009

Company announcement no. 2/2014

The Danish Public Prosecutor for Serious Economic and International Crime (SØIK) has today brought accusations against Danske Bank A/S of price manipulation of a particularly serious nature.

In connection with an internal investigation, Danske Bank found that the Group’s internal rules had been violated in relation to bond transactions between Realkredit Danmark and Danske Bank in the corporate mortgage bond market in 2009. Danske Bank informed the Danish Financial Supervisory Authority (FSA) of the matter, and the FSA handed the matter over to SØIK. As a result, SØIK is bringing accusations against Danske Bank, Realkredit Danmark and six employees.

Danske Bank has found that in 2009, a total of four employees from the banking operation and Realkredit Danmark violated internal rules and may potentially have manipulated prices. The internal investigation found no evidence that staff members other than the four in question were involved in the transactions. However, in view of the further investigation of the matter, the four employees and their two superiors have been suspended.

“We consider the matter to be very serious and are cooperating fully with the authorities,” says Thomas F. Borgen, Chief Executive Officer.

Danske Bank has been accused of price manipulation under particularly aggravated circumstances with the following wording:

“by, as a legal person, being liable for an agreement being made between Realkredit Danmark A/S and Danske Bank A/S on 13 February 2009 concerning a transaction in CIBOR Extra-CIBOR38 mortgage bonds (“RD var 13D6F”, securities ID DK0009275703) for a nominal amount of DKK 50,000 at a price of 96.5 with a view to raising the day’s average price as this was needed as a reference price for a customer transaction with Realkredit Danmark A/S of just less than DKK 12 million, which was suited for affecting the price in a direction deviating from the value of the bonds in the market, as the transactions were suited to provide incorrect or misleading signals about the supply of, demand for or price on the security, and/or the transactions ensured that the price was at an unusual or artificial level;

and

“by, as a legal person, being liable for the following transactions made between Realkredit Danmark A/S and Danske Bank A/S on 6 March 2009:

  • Agreement with Danske Bank to change the value date of already agreed customer transactions involving said mortgage bond (securities ID DK0009275703) for a nominal amount of around DKK 17.5 million at a price of 95.9 to the effect that the transaction would not affect the general price formation,
  • Agreement with Realkredit Danmark A/S to the effect that Danske Bank would not quote prices for the mortgage bond (securities ID DK0009275703) until Realkredit Danmark A/S had executed the transaction mentioned below,

with a view to allowing Realkredit Danmark A/S to enter into an agreement on customer transactions in the mortgage bond (securities ID DK0009275703) for a nominal amount of around DKK 650 million at a price of 96.25, which was suited for affecting the price in a direction deviating from the value of the bonds in the market, as the transactions were suited to provide incorrect or misleading signals about the supply of, demand for or price of the security, and/or the transactions ensured that the price was at an unusual or artificial level.”

Danske Bank A/S

Contact:
Group Press Officer Kenni Leth, tel. +45 51 71 43 68