It is highly unusual for a proposed C-suite executive to be rejected by regulators, underscoring the gravity of the situation Danske is in.

Danske Bank’s choice of a new chief executive to replace the predecessor who quit amid a major money laundering scandal has been rejected by regulators.

The Copenhagen-based bank had asked the Danish Financial Supervisory Authority to approve Jacob Aarup-Anderson, its wealth management head and executive board member, to be the new CEO. Aarup-Anderson would have filled the vacancy created when Thomas F Borgen resigned in September, leaving the post at the start of this month.

The regular is unhappy about the new man because it wants someone with more experience in some of the bank’s business areas.

Normally, when firms say that an appointment is subject to regulatory approval, it is highly unusual for officials to reject it. This action highlights how high the stakes in the Danish bank’s situation are.

Danske Bank has withdrawn the application and continues to seek a new boss. Jesper Nielsen will continue as the interim CEO until a permanent replacement is found, Danske Bank said in a statement yesterday.

“The board of directors unanimously backed Jacob Aarup-Andersen as [the] new CEO, knowing full well that longer experience in certain areas would have been desirable,” Ole Andersen, chairman, said. “The board has noted the FSA’s reply. The board is in dialogue with other potential candidates and will now continue the recruitment process in order to find the best possible person for the position.”

The bank declined to comment further on the issue.

The bank has been caught up in an international scandal around illicit financial transactions processed by its Estonia branch. Already, domestic Danish regulators have acted on the case, and the US Department of Justice has accelerated proceedings by opening a criminal investigation.

The case, along with other money laundering problems and claims in countries such as Latvia and Malta, has prompted some figures to argue that national controls against dirty money are not fit for purpose. In parallel, recently there have been renewed calls by the EU to tighten up the market for citizenship by investment, or “golden visas”. (For more on that story, see here.) 

Here is a recent story charting the sheer scale of AML failings in Europe, with references also to firms in other regions.