Danske Bank A/S receives a violation penalty of NOK 50 million for market manipulation

In February 2023, Danske Bank participated in the syndication of a 10-year government bond of NOK 22 billion for Norges Bank, which issued the bond on behalf of the Norwegian government. 

The Norwegian swap rate was used as the reference rate for the government bond's effective yield and price. The swap rate thus had a direct impact on the price and yield issuer had to pay when issuing the bond. 

There was a significant price increase in the relevant interest rate swaps prior to the time of pricing. Finanstilsynet has investigated the circumstances surrounding the pricing of the bond in cooperation with Danish supervisory authorities. Finanstilsynet believes that the swap rate was driven up by Danske Bank to an abnormal or artificial level at the time of pricing, and that the trades were carried out based on a deliberate strategy and in a situation where the bank profited from a high effective yield.

When considering its reaction and the size of the penalty, Finanstilsynet has, among other things, emphasised that the matter is considered serious and contributes to undermining confidence in the market. As a mitigating factor, it is emphasised that Danske Bank contacted the supervisory authorities itself on this subject.