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ESG think tank: Hardliner's U-turn on Danske Bank too early

Denmark's MP Pension is lifting its quarantine on Danske Bank equities just one week after the pension fund's CEO said there was still a long way before trust could be rebuilt. An ESG think tank says this reversal seems premature.

Jens Munch Holst, chief executive officer at MP Pension, has appeared 71 times in Danish medias since July, often commenting on the development at Danske Bank. | Photo: PR

Danish pension fund MP Pension has lifted the quarantine it imposed on Danske Bank equities, which has been in effect since 9 July because of the financial group's pending money-laundering case.

Since the quarantine went into effect, the words "MP Pension" and Danske Bank" have featured together 100 times in Danish-based news outlets, often with MP Pension's CEO, Jens Munch Holst, as a strong critic of Danske Bank's misconduct and saying why the pension fund had quarantined the equity.

"MP Pension practices ESG almost exclusively by negative screening, and it is often combined with a very big marketing ploy, as has been the case with the Danske Bank," says Jane Thostrup Jagd, lead researcher at think tank Center for ESG Research, to AMWatch. She adds:

"MP Pension's decision to lift the quarantine without new information having materialized seems a premature decision as the pension fund basically doesn't know what will happen to Danske Bank."

She highlights that the banks' owners have done something positive by creating a new board, but stresses that MP Pension does not know whether it will be a good board, which ensures a good governance structure.

From a purely financial point of view, it is often profitable to divest companies that are screened negatively because of poor management. However, it is even more profitable to engage with the company and make it change its behavior instead, Jagd says.

Sudden U-turn

Not long ago, 6 November, MP Pension's CEO, Jens Munch Holst, stated to AMWatch's sister-site FinansWatch that there was still a long way to go before investors' trust in Danske Bank could be rebuilt.

However, yesterday, 14 November, the chief executive made a U-turn and argued on AMWatch's sister site FinansWatch that the proposed composition of the next board of Danske Bank had the aim of rebuilding public trust.

"We have thought things through. What is going on right now? There is a major reshuffle of the board, and we thought about how that affects the management. We have a responsible investments committee which agreed that the grounds for recruiting a new CEO have become much better. This is what made us re-establish our trust in the new management," Holst told FinansWatch.

MP Pension owns Danske Bank equities worth roughly DKK 370 million (EUR 50 million).

Most likely divestors of Danske stock are pension funds, says Lead Researcher at ESG think tank

Major investors may flee Danske Bank securities over scandal 

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