Investor update

Sep 19, 2018

Summary

The review found serious AML and supervisory failures; 6,200 of 15,000 customers had been examined, with most deemed suspicious and reported. FY guidance fell to DKK 16bn–17bn, while the current buyback continued.

Welcome to the Danske Bank conference call regarding the report on the non-resident portfolio of Danske Bank in Estonia. I will now hand the call over to Claus Jensen, the Head of Investor Relations. Please go ahead, sir. Thank you, operator, and thank you all for taking the time to listen in on this call today. The participants on the call today is Chairman of the Board, Ole Andersen, CEO, Thomas Borgen, Interim CFO, Morten Mosegaard Christensen, and Partner at Bruun & Hjejle, Ole Spiermann. In today's call, we will present the report on the non-resident portfolio at Danske Bank, Estonia. We aim to end this call no later than 4:45 P.M. After the chairman's introduction, we will open up for a Q&A session. Please note that this is an investor relations call and that all press questions should be directed to the press department. Afterwards, feel free to contact the investor relations department if you have any more questions. I will now turn over the word to Ole Andersen. Thank you, Claus. Welcome to this conference call where we'll be answering your questions about the investigations that we published earlier today. I know that you've been waiting for this report for quite a long time, and I hope that we'll be able to clarify and address the questions and the concerns that you may have. Before we start with questions, let me just give you a brief introduction to the investigations and the findings that we published earlier today. The investigation has been very thorough and comprehensive. In total, approximately 70 people have been working full time with the investigations during the last year. We have looked at two things, accountability and transactions. In terms of accountability, our investigation clearly shows that our AML procedures and set up in Estonia were seriously flawed and that the group's supervision of the Estonian branch failed. We failed to react properly to warnings over the years, and a number of employees did not live up to their responsibility. Moving to the portfolio investigation, we have looked at a portfolio of 15,000 customers. Initially, we had 10,000 customers in the non-resident portfolio, but the investigators decided to increase it with 5,000 other customers in the branch to make sure that we had all relevant customers included in the investigation. The flow of these 15,000 customers amounted to approximately EUR 200 billion, covering approximately 9.5 million transactions. For the purpose of analysis, all payments have been converted into euros. The currency most used were US dollars and euros. Because of the large number of transactions and customers involved, we've taken a risk-based approach to the investigation, starting with the customers with the highest number of hits to the risk factors. At this point in time, we have investigated 6,200 customers, most of which were deemed suspicious. All suspicious customers, they have been reported to the authorities. Due to the investigation method for the portfolio, we are not able to state how many of the transactions and how much of the flow of EUR 200 billion that was suspicious. The investigation into the non-resident portfolio is still ongoing, and we continue to share all additional findings with the relevant authorities. At this point, the screening against sanction lists have not uncovered any evidence of any violations of the sanctions, but the investigation is still ongoing. Finally, our investigation shows that the bank has failed to live up to its obligations and responsibility. We, of course, take this very seriously, and we regret these events deeply. They do not reflect the kind of bank that we want to be, and we will do everything we can to learn from these events going forward so that something like this can never happen again. Those were my initial comments. Thank you, Ole. We are now ready for your questions. Please limit yourself to two questions. If you are listening to the conference call from our website, you are welcome to ask questions by email. Operator, we are ready for the Q&A session. Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will now take our first question from Pawel Dziedzic from Goldman Sachs. Please go ahead. Good afternoon. Two questions from my side. I know you can't comment on any specific investigations, but could you help us understand what is the timeline of events going forward? First of all, when do you expect to conclude this portfolio investigation and have a more reliable estimate of the value of suspicious transactions? Do you think perhaps if it is needed to reach any settlements with authorities or perhaps given amount of evidence you have currently, you can perhaps engage sooner than that? The second question is on your capital distribution policy, and I guess more specifically, given uncertainty over potential fine settlements and so on, would you consider scaling back current buyback program or dividends for 2018? If uncertainty continues, would you hold off from applying for another buyback program in 2019? Thank you. Okay. Thank you very much for your question. I would like Ole Spiermann to respond to your first question about the time schedule going forward. Yeah, thank you. We have stated in our report in Section 3.3.7 and 3.4.5 what is outstanding in terms of investigative steps. We need to go into more than additional 8,800 customers. There are trading activity also, and there's tax screening. We are forming a view at the moment how long time this would take. We have no estimate at this time. I think it is fair to say that any reporting will go to authorities, and unless there is of substantial importance to the market, it will not be reported to the market. To your second question, there is no plans from management nor the board to stop or scale back the current share back issue. That goes according to plan. Your second part of the question was the capital distribution, going forward. We have a very clear capital strategy at the bank, and I would just like to repeat that. First of all, we will be within our capital range target, which is between 14% and 15%, and of course, we will be in the upper end, as we also are today. Secondly, we have, as you know, capital dividend strategy between 40% and 60%. Then we said if we had any additional capital and we can see profitable growth, we will also execute on that as we have done for the many last years, particularly in Norway and Sweden. If we have any additional capital, we will distribute that back to the shareholders in one way or another, as we have done now and are in the midst of the share buyback issue. Of course, this is a discussion management will do with the board of directors during the fall, and that we will need to come back to, but at the present time, there is no change in the overall strategy, and we will take all considerations into account when we look into 2019, because I think that's what you're asking about. We will, as always, also have a discussion with the local authorities, that meaning the FSA on any potential share buyback. Thank you very much. That's very clear. Can I come back to the first question on timeline? I understand that you covered a little bit over 6,000 clients already, and there is, let's say, 9,000 more to go. The investigation currently took around 12 months to complete. Is it fair to assume that this is a proxy for how long it will take to continue the rest, or this is perhaps the wrong way to think about this? We cannot give an estimate now. You could say it took time to set up the system. So it should be quicker to do the remaining 9,000 customers, but there are additional steps on top of that. So we don't have an estimate at this point. Thank you very much. We will now take another question from Per Grønborg from SEB. Please go ahead. Yes. Thank you. Good afternoon. Two questions from my side as well. What everybody is talking about now is what the potential fine could be from the U.S. I have two questions in that relationship. Friday, we saw Wall Street Journal talking about there were ongoing dialogue between the authorities in the three countries. Have you been in any dialogue on a big settlement with all relevant regulators? The second question, when we look at other fines that have been issued in the U.S., you get the perception that it is more or less one-to-one compared to the money that has been floating through the system. Your number is, of course, totally out of range compared to what we have seen before. It probably also is defined significantly more conservatively. But any input on how we potentially should look at this? I know this is a bit of a tricky question. Thank you. I will take your first one. As we have said repeatedly, we have multiple dialogues with multiple levels with multiple authorities in multiple countries. That will continue, and we do not comment on any specific authority dialogue unless of its significant importance, which we will then note in footnote number 10 or the financial implications. So we have no additional information to share with you at the present stage. When it comes to the second question, I have no information on that area, and I do not comment to this, but maybe Ole Spiermann would like to comment on that. We have no comments on that. I think it is going to be pure speculation, Per, about what I think you alluded to, what should that fine be. That is a pure speculation that it is not our business to speculate on this one. No, that is fair enough. Thank you. We'll now take another question from Robert Rehn of Kepler Cheuvreux. Please go ahead. Yes. Hi. Thank you for taking the question. This morning you revised down the profit outlook for the year, citing the 1.5 billion DKK giveaway and also subdued activity in the trading line. But you did not say anything about provisions or such. Wouldn't this be an opportunity to or how should we think about the wording in the contingent liability note in the reports that we have seen recently that the dialogues with public authorities wouldn't lead to any material effect on the financial position? Thank you for your question. You're correct, we have, due to the donation of 1.5 billion DKK and continued subdued activity, revised downward now the guidance between 16 billion DKK and 17 billion DKK. We can only make reservations if there is some certainty on what we should reserve, and there is no information, to our knowledge, which makes any number relevant for a reservation. As we have repeatedly said, if there's any information relevant, we would either footnote it in footnote number 10, or we would do a financial reservation. We have no information relevant to make any further information to the market at the present time. Okay, thank you. Second question on how should we think about the costs related to the investigation? It was alluded to in the press conference today that the investigations has so far, has the estimated cost of approximately DKK 200 million. Okay, thank you. We will now take another question from Mads Thinggaard from ABG. Please go ahead. Yeah. Hi. Thank you for taking my questions. Mads from ABG here. I have two questions, and the first one is on the screening of the sanction lists. If you could put a bit more, I do not know if you could put a bit more flavor on, if you screened all the 6,200 clients, I guess the most risky, or clients are prone to most risk factors that you have done by now. Is it those clients that are free of having violated the sanctions, or have you actually done more than that, or less? That would be a good thing to hear. And then also I really do not understand why you are not giving us the transaction volume for the 6,200 customers that you have processed by now, since you obviously must know this number. I think both questions are relevant for Ole Spiermann. Yes. So in terms of sanction screening, what was meant and said at the press conference was that there has been screening of all the 15,000 customers under investigation against the sanction list, and there has been found no sanction violations. But obviously there is more steps to be taken, and those are being designed at the moment. Okay, so you have to make it deeper or? There are also counterparties and so on who you would screen against. There is more work to be done. Yeah, okay. But you know the people on the sanction lists, and you know the transactions. So what is missing here? Yeah. But it is very complicated to do the sanction screening, and you get a lot of hits, which you then have to review. And the larger the population, the more hits, and most of those would be what is called false positives. So you need to design a process in a careful way in order to make it manageable, but of course also get the right results. Okay. But you are saying all the 15,000 clients covered at some level of screening. Yeah. The clients have been screened, all the client names. Yeah. Okay. Then we cannot go closer in terms of the flow than what is stated in section 7.2.3 of the report, that the approximately 6,200 customers, that they represent the majority of the flow. Okay. Thanks. We will now take a question from Sofie Peterzens from J.P. Morgan. Please go ahead. Yeah. Hi, here is Sofie Peterzens from J.P. Morgan. I was just wondering if you could give a little bit more detail around the EUR 200 billion of flows. What are these flows exactly? Is it customer deposits? Is it that they have been buying and selling shares or bonds? If you could give a little bit more detail what these transactions or flows actually are. My second question would be, in case you would get potentially fined by one regulator or another, would there be any recourse that you could claim from Sampo Bank, given that you could make the argument that initially they were the root of the whole issue? Then just finally, why does it take so long to go through 6,200 customers? You would assume that it would be a much faster process than take a year to go through that amount of customers. Thank you. Thanks very much, Sophie. I think that was three questions, but I would like Ole Spiermann to answer the time issue and the flow issue, and then the chairman would like to answer your second question. All right. In terms of the flow, what we are talking about is payments. Payments coming in to customers in the portfolio and payments going out from the customers in the portfolio. Those coming in and out, that flow seen as a whole, that is approximately EUR 200 billion. That is what we mean about the flow. Then you had another question about the. Why does it take so long to screen 6,200 clients? Yeah. We look into the customer and collect the information that is in the customer database, and then we look into the largest counterparties they have had and look into some of the transactions. It takes some time. That has been done, I think, as fast as possible, but it takes some time for each customer. Also, Sofie, if you look at the facts, we are talking about 9.5 million transactions, and one needs to have a certain number of transactions to be able to also find what would they call SAR. I think that's also why it takes some time. But trust me that everybody has the same interest to try to make this as fast as possible. But at the same time, we need to have the quality, so we report the right information to any authorities so they can work with it in a constructive way. Chairman? Yeah. You ask if it would be possible to reclaim anything from Sampo Bank, from which we acquired Sampo Bank in 2007. First of all, I think we should all realize that the acquisition took place 11, 12 years ago. I think the only thing I can say is that you should not expect us to be able to reclaim anything from Sampo. But this is something we are looking into once more, and if at all possible, we will of course do it. Thanks very much. We'll now take another question from Johan Ekblom from UBS. Please go ahead. Thank you. Just one question from me. You said you think you've identified most of the suspicious customers in these 6,200. But if the majority of them are deemed to be suspicious, why should we expect such a drop-off in the rate of suspiciousness in the next hundred or thousand customers? I think that's a question for Ole Spiermann. Yep. We find that the vast majority of the 6,200 customers, they have been deemed suspicious, the ones they examined so far, and we have no view about the remaining 8,800. Undoubtedly, there will be more suspicious customers, but what percentage we do not know. You should bear in mind that we have started with those hitting most risk indicators, and we are moving down, and there's a group of customers hitting no risk indicators. How can you then state that you think you have a good idea of the scope of the problem if you don't have a view as to the probability of the remaining 8,800 being suspicious or not? The majority. Yeah. We have no view about the remaining 8,800, so I don't know if it's a misunderstanding, but we have no view. Those remain to be shown. Okay. I thought it was stated clearly at the press conference that with the review that you've done, you thought you had a good scope of the problem, but maybe I misunderstood. We have a good understanding with you feel of the portfolio, and what was in it. But we haven't made up conclusions with regard to the 8,800 customers. We know that the 6,200 we have examined so far, that they account for the majority of the flow, as stated in the report. Then maybe to follow up on that then. When you review this, is it the number of suspicious counterparties that's the main issue, or is it the flow? Is it less severe if it turns out that a lot of the remaining customers are suspicious because their transactions were lower? Does that in any way mitigate it? There are different ways to come to a conclusion that a customer is suspicious. But normally we look into the main counterparties, and when a certain number of those are suspicious, then we conclude the customer itself is suspicious. Okay. Thank you. Now take a question from Yoan Dalmir from J.P. Morgan. Please go ahead. Yep. Thank you for organizing this call. I have two questions, but I want to make a preliminary remark. Obviously, the situation is not great, but one of the things that as an investor I don't think is great is the way you come forward today, where market was really expecting you to come with something that was completely finished, the review completely finished, and not just having reviewed 40% of the clients. It was difficult, but this process leaves us with so many unknown unknowns. In particular, like other of my colleagues mentioned, there are some key numbers that you could have provided. For example, the volumes backing the 6,200 that you already reviewed, the amount of USD versus euros would have been helpful. All this, in terms of the process of managing this, I think you could have done better. Okay, on the question, I have two questions. First of all, currently, do you have any litigation reserve? Can you give us an idea if you're planning to build this up, and on what basis you can do that? The second question, actually, if you allow me three, that would be great. The second question is, you have today, you said that the vast majority of the customers that you reviewed are suspicious. Then in terms of the process, although it won't refer it to the regulator, then they do the inquiry. When do we know if these cases are illegal? That's my second question. The last question, if I may again, we see some headlines either the Danish wants to increase the fine relating to AML, et cetera. We see some headlines also in the Euro area. To what extent these can be actually retroactive in Denmark? Okay. Thank you very much. I will take your first one, and then Urs Biemann will take your 2 last one. No, we have no litigation reserves in our accounts. I don't think that's actually legal accounting wise, because you need a reason to put any reservations aside. Then Urs Biemann will answer your 2 questions, retrospective law, and the question about illegality. Yeah, retrospective law, we haven't, I would say, looked into, but that's a general sort of constitutional question, human rights question that, I think could be easily seen as expropriation, but that has not been assessed on our part. But there's no straightforward way, I think, for the parliament to take such steps. Our base case should be that the Sorry. The base case should be that the fines should remain limited as they have been. There might be a small increase, but it's not going to be a large, unless they really change the law, right? In Denmark. Yeah. New legislation you would expect would be forward-looking, and if you give it retrospective effect, then it could be challenging for us. But also, we haven't had time to look into the details, but our understanding is that the proposal that is on the table is actually going to be implemented from next year. Okay, thanks. And for the suspicious, that's just illegal process? Yeah. If I read your question right, just translate, you say, from we report a suspicious transaction, to what extent do we know it's illegal or not? Is that the question? Yeah, exactly. I think we never will find that out because that's the police matter. All we can do, I'm not a lawyer here, but I think I can see the nodding from the lawyer here, is that we can only report suspicion. Then it's up to the police, and of course, finally the court to decide if this is a legal transaction or not. That's far beyond where we go. Okay. This process would be completely parallel to any potential review by any regulator. You don't think that the regulator would wait for this number? The system is, if you have to make a finding of money laundering, you need to establish that the funds are proceeds from a crime and the bank normally would have no chance of having that information. Here you can share some information to say there are some transactions which look out of order or in any other way suspicious. Then the local police, the FIU, they can take that information, try to collect some further, and do a proper investigation into a criminal activity. That's the system that the bank reports a suspicion, and it's for the police to do the remaining work. Which in many cases require that they cooperate with authorities in other countries. Your failure is you have failed so far up until today to report the suspicious. It is not whether they are illegal or not. It does not change any potential fine from any regulator whether they are actually illegal or not. The problem is that you have not reported suspicious ones. Yeah. The bank should have done this exercise, obviously, back in the active years. Exactly. And done the reporting at that point. And that could have seen as a breach of procedure rules, but that is different from the criminal activity we are talking about here. Fantastic. Thank you so much. We will now take a question from Jacob Kruse from Autonomous. Please go ahead. Great. Thank you. Can I start with the U.S. risk, just to understand, when you look at the potential U.S. risk exposure from regulators there, and you talk to your lawyers, you use correspondent banks. What is the situation in terms of activities that would actually have exposed you to the U.S. legal system? Because I guess there must be some kind of line where it falls under their jurisdiction and where it does not. Maybe if you could give any kind of indication of how much the U.S. dollar volumes are. I know you say it is mostly euros and U.S. dollars, but if it is possible to drill that down a bit. Then I just also wanted to ask on this suspicious transaction issue. You say it is a large part are suspicious. I am trying to figure out what large part means. I guess from a dictionary point of view, it means more than half. Is that how I should read it? Or when you say large part, is it large relative to what you would like to see, nothing? Maybe if you could just also clarify, you said you have gone through the OFAC list for your 15,000 clients, but should I take that to mean that you have not run the counterparties against the OFAC list? Thank you. I think that was three questions, and I think we will let Ole Spiermann start on your list. Yep. If we could take the last question first. That is correct that it is outstanding to screen for the counterparties, in terms of sanction breaches, OFAC, and other lists. With regards to your first question about U.S. risk exposure, this is a complicated analysis. I think one has to start bearing in mind that Danske Bank's footprint in the U.S. is very small compared to the other AML cases that you may look into, such as mirror trading and so on. Danske does not have a branch in the U.S., so none of these payments have been processed in the U.S. There is no breach, as in many other cases, of U.S. AML procedure rules, which is what have triggered fines in other cases, on most other cases. This is a separate case if the U.S. would want to go into it. They would first have to find jurisdiction. That is one thing. They would also have to prove there had been some criminal activity outside the U.S. For example, that the payments in U.S. dollars are proceeds of criminal activity, perhaps in Russia or somewhere else. It would be a very different case compared to what you are seeing in most other instances. Okay? Yeah, just the size. What you mean by large part of transactions are suspicious, if possible? Oh, yeah. That is the last part. It is not necessarily the majority. We do not have an estimate, so it would be guesswork on our part to be more specific. There will be some suspicious transactions, we would say no doubt. What share, we are not in a position to say, I guess. I think if you read the report, the methodology is that if a customer has one or several suspicious action, the whole transaction are reported, and that's why it's difficult to separate it out because one has to be- The customer is reported. Yeah. Oh, sorry. The customer is reported. Okay. Thank you. We'll now take another question from Rich Smith from KBW. Please go ahead. Apologies, we can't hear the question. Hi there. Can you hear me now? Yes. Two questions from me, I guess. The first is just around ongoing compliance expenditure. I appreciate the commentary that you've given this morning around the investment that's gone into the system side of things and increased headcount. I guess if I look across at some of the other banks that have faced similar issues, a number of them have seen that cost continue to creep up in the following years. I just wondered what your comfort level was that your current run rate in terms of regulatory spend and compliance expenditure was fixed? Then sort of as a corollary to that, the DKK 200 million that you've highlighted to date in terms of the investigation, should we think that that's going to be a similar sort of run rate to complete the remaining outstanding cases? Finally, just in terms of the flows that you have seen, appreciate the comment that a lot of them have been US dollar, but wondered if you could quantify that in a percentage, please. Thanks. I will take your first questions. First of all, we believe that the present run rate is representative for the run rate also going forward. You have to take into account that the upgrade of our whole AML and compliance side has been ongoing since 2015. We also believe that many of our processes will be digitalized and automated to large extent. Many of the manual processes actually will fall away, but we will continue to have a good number of recruitments of specialists to ensure that we can always try to fight against criminal activity. Basically, run rate on AML generally should be around these levels. You asked a much broader question about compliance generally. I think compliance costs generally are upwards going as the expectations to the financial industry is increasing. It is nothing particular we know about now, but it is something we constantly will be on top of. Your second question is about this EUR 200 million. I am looking at it lower now. I think it is fair to say that has been more one-off costs, particularly due to the deep dive which has been going on, and these costs will come down significantly going forward. I do not want to put a particular number to it, but that will go into the final guidance we will give you later, and that will be in the beginning of, was it 2019? Okay. You had a question about dollar flow. I give that to Ulas Birman. Yep. As you write in Section 7.1 of the report, the majority of the chosen amounts, those are in USD and euros, in that order. That's the information we can share at this point. We have changed it all into euros in order to get a figure and use the swap rates for different days, and that's been going up and down. But as stated, the majority is in US first and then euros. Okay, thanks. We'll now have a question from Lee Street. Please go ahead. Hello, good afternoon. Thank you for taking my questions. I have two questions, please. From an early answer, there's obviously no certainty on any potential financial penalty at this stage, and that's why it's not provisioned, which makes total sense. My question is, given the lack of certainty, but obviously there is still a risk of large fines, we've seen comments from the Danish business minister, possibly the U.S. could get involved. I was just trying to understand how you justify maintaining your share buyback, or should I just read that effectively as being that you're so confident whatever fine you will get will be manageable, you can maintain it? I was just trying to work out how you justify on maintaining it on a prudent basis. Secondly, is it your expectation that you will only reach a settlement or conclusion with the regulators on this matter once you have finished reviewing the remaining 8,800 clients that are still to be screened? I am really just trying to get a handle on how long this whole episode is likely to go on for. Effectively, those are my two questions. Thank you. Okay, I will take your first question. I think it is need to put this in perspective. The bank is extremely solid today with a very solid core tier one capital, as we announced in connection with the Q2 results. Secondly, the earnings capacity of the bank is also solid. Thirdly, we have no insight, any potential signs, if at all, of any potential fine. So there is no reason why management would recommend to the board to cancel the share buyback with the present knowledge as we have it today. So that is why we are very clear on it, and that will continue until if there is any new information which makes it relevant to reconsider. Then your second question, I will leave that to Ulas Birman. Slightly unsure about the specific questions, but did you catch it, Ulas? No, could you please repeat? Effectively, obviously, this has been going on for some time, and if you have got another 8,800 clients to review, it could go on for some time more. So I was just trying to work out, do you think the regulators will need you to have fully completed the investigation of all clients before they will formally sign off on this? Therefore, should we be thinking this is going to last for many more months and years or potentially a year before it is actually formally resolved? That is what I am trying to get a handle on because obviously it has weighed pretty heavily on your stock price and obviously your credit spreads. Thank you. Yeah. We think here in Estonia, you have an obligation to go through the customers, and we have been through more than a third effectively, I think, within half a year. It might be that the rest that they can be done in a quick way. We will certainly look into that. Okay. Thank you for your answers. We will now take another question from Jacob Brink from Nordea. Yeah, hi. It's Jacob from Nordea. I have a question left, actually. Just coming back to the whole jurisdiction matter of the U.S., Ulas Birman you mentioned before, and also taking that in relation to page 29 in the English version of the report of where flows actually landed. I see the U.S. is not on there. Could you please try and repeat what you said about the jurisdiction of the U.S.? Are you basically saying that the clearing of the USD did not happen on U.S. soil, or what was it exactly you said before? No, I think I didn't comment on U.S. jurisdiction. Obviously, this is a question of U.S. law, but there has been a flow in U.S. dollars as part of this, and that has been cleared by U.S. banks. So, on some theory, you could say that that is an establishment of jurisdiction. How does that then compare to the page 29, where U.S. must be less than 4%? Is this because this is the end customer receiving the money and do you really know those or? Yeah. Okay. That's the next thing in chain. If it goes via the U.S. for purposes of clearing, then it could still go via the U.S. even though it was to a Hong Kong or Latvian citizen if it was in U.S. dollars, we believe so. You should not compare those two. What if it would be a U.S. bank operating in Switzerland? Would that be then counted as a Switzerland transfer or U.S.? But I think even if it's to Switzerland or China or whichever jurisdiction, if it is in U.S. dollars, it would involve a U.S. correspondent bank. Okay. And you're saying you don't know if those were cleared in the U.S. or if it was cleared outside U.S., because I guess both can be happening and quite a big difference for a fine size. Okay. We have no information to share there. Okay. Fair enough. Thank you. We will now take another question from Andreas Håkansson, BNP Paribas. Yes. Good afternoon, everyone. First question is really, I am not quite sure why you published this report today, because as we have been discussing a few times, you only seem to investigated half the clients roughly, and you have not done transaction by transaction investigation. We do not quite know much at all, I would say. We do not know who is going to be the new CEO. Why did you decide to present it already today? I think it is two questions. I think one was regarding the CEO. I will like the Chairman to answer that question, then Ole Spiermann would like to answer your first question. Sure. Your last question about not having new CEO. Thomas Borgen resigned this morning, and as I have said in the presentation today, we of course have some succession planning going on. We are also obliged by law to have a kind of a contingency plan, if something should happen to our CEO. That just means that we of course have considered this, but as it is also said in the release today, Thomas Borgen will continue until we have a solution. We think this is a very important question for the board. It is probably one of the most important questions, and therefore we want to think this through, and we want to be absolutely certain and to do our homework before we conclude on this. Now, I think you linked it to why then the reporting today. Well, I think that you have to realize that there were two tracks in the investigation. One was the accountability track, and that part of the investigations have been completed today. When it comes to the transactions, there is already enough information to give the public a good understanding of what has been going on. Okay, just following up on that, given that there hasn't been a transaction by transaction investigation yet, I guess when you say that there's been so far no one on the U.S. sanction list, I guess that would be out of your existing clients, which I guess would have been a surprise if they were on that list. But isn't the danger really that some of the recipient of those flows are on the U.S. sanction list? Isn't that really where we see the risk? How long will it take until you've gone through all the transactions so you can be clear who's on the receiving end of those transactions? Ole Spiermann would try to answer you short. Yeah, that's true that it's outstanding in terms of sanction screening. That's correct. But how long? Because if you only go through half the clients, if you're then going to go through 9.5 million transactions, when could we have visibility on that? Because that's where we have the risk, I guess. Okay. I think we have to come back that sometimes U.S. regulators would require if you have a branch in the U.S. or U.S. footprint a transaction by transaction analysis in certain parts. That's not where Danske is. Danske has not that footprint in the U.S. We don't have a branch. We have not breached U.S. AML procedure rules. It's a different game here. What we've been talking to the Estonian FIU and decide method together with them, and they are pleased with the customer by customer approach. You don't think the Danish regulator will want to know who was on the receiving end of those potential money laundering, and isn't that what this whole thing is about? That, obviously, we don't know. I think the bank here has a general interest in understanding what went on, and there's a good feeling now that we have a general understanding of the portfolio. Okay, let's move to the next question, please. We will now take a question from Ian Tilley from Citi. Please go ahead. Yeah, thank you. It's Ian Tilley from Citigroup. Two very quick ones, please. Firstly, in terms of 6,200 customers, just coming back to the way you're defining them for the suspicious activity reports, should we be using the three criteria set out on pages 11 to 12 of the report? Because they seem to be fairly wide-ranging, and therefore, the feeling is that you can probably allocate most of the payments to being suspicious using those three criteria. So would we say you're being fairly liberal in the way you're reporting them this time around? That's the first question. Just one clarification, the EUR 200 billion, that's EUR 200 billion in and EUR 200 billion out. It's not EUR 100 billion in and EUR 100 billion out. Thank you. I think both of them are relevant for Jesper Marti. Yeah, that is correct, the last question, that is 200 in and out, so to speak. The flow comes in and it goes out. That is correct. Then in terms of those examples, according to guidelines in Estonia, which of course we are including, but those examples, we look more carefully into the customer. As I said, we don't necessarily expect that all the remaining customers will have the same high degree of suspicion. Okay. So we shouldn't be thinking you're going to put through 6,200 plus SARs minus whatever you did during the 2007 to 2015 period. I'm not sure we got that question. Could you please repeat that one more time? Yeah. In terms of the suspicious activity reports, the 6,200, you obviously said they're sort of suspicious. But in terms of the reporting to the regulator, how many of those are you actually going to report in terms of SARs? Should we expect more than 6,200 because of the multiple payments? Basically, I'm trying to get to the quantum for what you're actually going to report to the regulator. It's the customers which are reported. The 6,200 customers, they are being reported. What happens with the remaining close to 9,000, we do not know. Right. Okay. You say 6,200 minus the, I think it's 760 that you already reported during the period, is what we should be thinking about. You could say we also review the customers which have been reported historically. What is outstanding is 8,800, and those we have not looked into yet. We have not formed a view. Right. Okay. Thank you very much. We will now take a question from Adrian Cighi from RBC. Please go ahead. Hi there. One question from my side, please. This morning, you have lowered the net profits guidance for the year, citing the lower trading environment. Is this due to the overall market weakness, or is this in part due to loss of market share as some customers might move their business elsewhere due to reputational concerns? Maybe speak more broadly if you see any pushback from customers, either retail or corporate, due to the ongoing AML issues. Thank you. Thank you for the question. The guidance we are giving today is purely related to continued subdued trading activity, particularly in the Danish fixed income market. It is a continuation of what we have seen in Q1 and Q2. Overall, we can see that we are having a good activity, but activity is always relating to the market activity. Overall, we can see that we continue to grow in those markets we have grown historically, so there is nothing new there. I would not like to comment any more before we come out with the third-quarter results, but conclusive-wise, it is purely related to the trading. Thank you. We will now take a question from Riccardo Rovere from Mediobanca. Please go ahead. Good afternoon. Good afternoon to everybody. Just one question from my side. Would you be surprised if regulators asked you to set aside more and more capital for operational risk, and this not as a one-off, but on an ongoing basis? Why this should not happen given that we are talking about EUR 200 billion under scrutiny, which is If I understand it correctly, if our numbers are correct, we are talking about an amount that is equal to 70% of the Danish GDP. Why shouldn't they start asking you to set aside more and more capital? Thanks. As you know, the FSA has asked us to consider the Pillar 2 add-on of minimum EUR 5 billion. We have done work on that, and we also have included that in our capital planning, and in the capital requirement. Of course, the regulators are always free to have a fresh look at this, and they may look at it. We have no insight which we can share with the market for the time being on that issue, for the time being. Right. But would you be surprised if that happened? That's a speculative question. I have no comment on that for the time being. All right. Okay, thanks. We will now take another question from Karin Cunningham from Autonomous. Please go ahead. Thank you. My question was quite related to the last one actually, in terms of potential to increase Pillar 2R. But when does your official ICAAP review process take place? I appreciate that there might be some out-of-cycle review taking place, but when would the normal review take place with an outcome in terms of an official Pillar 2R requirement? Morten Danso will answer that question. So first of all, we do a reassessment of the ICAAP every quarter, and we will every quarter reassess the need for Pillar 2 add-on. There's no fixed schedule in terms of an annual review process where we do this. Thank you. Okay, can we have the last question please? We will now take our last question from Paulina Sokolova from Barclays. Please go ahead. Hi. Thank you for taking my questions. I have two actually. The first is just a clarification. Did you say that the majority of the EUR 200 billion of flows was accounted for by the 6,200 customers that you have already investigated? The second question is just coming back to the risk of the U.S. levying a fine. I guess, I know you cannot comment on timeline, but how do you see this playing out? One option is that the U.S. does not decide to launch an investigation, in which case you said you will publish a press release. But if they do not, then should we just expect to live with this uncertainty or can you at some point have the U.S. authorities confirm that Danske Bank is in the clear? Thank you. That was some long questions. Let us see if our lawyer can try to pick up on your questions, if he got it. So the first question related to the 6,200 customers and the flow or- I think it was such a long question, the last one, so we kind of missed your first question. Sorry, could you please repeat the first question? Sure. Did you say that the majority of the EUR 200 billion of flows was accounted for by the 6,200 customers? Yep, that is correct. That is stated in section 7.2.3 in the report. Thank you. Then I think you asked about a very generic question about how long this can drag out. Isn't that the key of your question? Yes, but if we don't get any announcement by the U.S. authorities that they're launching an investigation, could you have the U.S. authorities issue a statement saying Danske Bank is in the clear, so there will be no investigation. Is that a possibility? We believe, again, that would be for U.S. counsel, but we believe that would be highly unusual. I think again, you should look at this from a perspective that Danske has a small footprint in the U.S., and is more relevant and of greater interest to many more regulators than the U.S. regulator. We know there are ongoing investigations in Denmark and Estonia. The bank, as far as I know, I've heard nothing about any investigation going on in the U.S. Okay. Thank you very much. Okay. That was the last question. Thank you all for your interest in Danske Bank and for your question. This is unfortunately a very unfortunate case, but hopefully we have been able to give some more clarification in today's Q&As. As always, you are all welcome to contact our IR department if you have more questions. A transcript of this conference call will be added on our website at the IR app within the next few days. Thank you very much and good afternoon. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.