Casper von Koskull, chief executive of Nordea, has admitted the risks of criminals using its network caught Scandinavia’s biggest bank off guard, as an AML scandal sweeps across the Nordic region.
The scandal – with reports highlighting billions of dollars of questionable money flows from the former Soviet Union – caught its second scalp last week, with the resignation of Swedbank chief executive Birgitte Bonnesen, six months after the resignation of Danske Bank chief executive Thomas Borgen.
Casper von Koskull, Nordea
“We were naive and complacent; we underestimated the complexity involved and the systems needed to deal with it,” says Von Koskull, while also calling for a new AML authority at a European level.
During the past three years, Von Koskull says Nordea, like other Nordic banks, has improved its AML systems, investing €730 million since 2015, while deploying 5% of its workforce on the problem and retraining others.
Von Koskull’s mandate, on becoming chief executive in 2015, was partly to invest in compliance systems.
Nevertheless, he warns more work is needed by banks and authorities, including cooperating better to prevent money laundering.
“We were behind the curve as a society,” he says.
“We are fundamentally different compared to four years ago, but criminal activity will always be two steps ahead. We are in a different place today to what we were, but we will need to do more and even that’s not enough, as we need different infrastructure for cooperation between banks, and between banks authorities.”
He continues: “Money laundering is cross border, and we only see part of the chain. The only way forward is much closer cooperation between banks; between banks and authorities; and between authorities and banks.
“We need a supranational authority for this, certainly at a European level.”
In Europe, you’re holding back the strong banks to wait for the weak ones to catch up
- Casper von Koskull
Meanwhile, amid analyst warnings this year of new European Central Bank (ECB) pressure on European banks to shore up their capital – and therefore have less generous dividend policies – Von Koskull says the single eurozone supervisor should “allow the strong ones to be stronger”.
He says Helsinki-based Nordea, for example, should be free to continue its policy of increasing dividend pay-outs, even as it reached 91% of profit in 2018.
“Will we be able to pay more than 100% pay-out ratios? Of course we should be allowed,” says Von Koskull. “Why build buffers on buffers?”
Higher dividend yields would boost strong banks’ market capitalization, potentially making it easier for them to engage proactively in mergers, he says, adding: “In Europe, you’re holding back the strong banks to wait for the weak ones to catch up.”