Norwegian Financial Supervisory Authority imposes infringement fee on Danske Bank for market manipulation tied to NOK 22bn government bond issue

The Norwegian Financial Supervisory Authority has imposed an infringement fee on Danske Bank A/S for market manipulation in connection with the issuance of a Norwegian government bond in February 2023. The authority concluded that the bank drove the Norwegian swap rate used as the pricing reference to an abnormal or artificial level at the time of pricing. Danske Bank participated in the syndication of a NOK 22bn 10-year bond issued by Norges Bank on behalf of the Norwegian state. Because the swap rate was used to determine the bond’s effective yield and associated price, it directly affected the issuer’s funding cost. Finanstilsynet identified a marked price increase in the relevant interest rate swaps ahead of pricing and, after examining the circumstances in cooperation with Danish supervisory authorities, found that the trades were executed as part of a deliberate strategy in a situation where the bank profited from a higher effective rate. In assessing the sanction and its size, the authority treated the conduct as gross and undermining trust in the market, while noting as a mitigating factor that Danske Bank itself contacted the supervisory authorities about the matter.