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Nordic bank bans traders from buying VW shares

UPDATED: The biggest bank in the Nordic region, Nordea, has announced it is barring its traders from buying Volkswagen shares and bonds for six months over the German manufacturer's emissions scandal.

Published: 24 September 2015 12:42 CEST

Nordic bank bans traders from buying VW shares

A VW dealer in west Sweden. Photo: Adam Ihse/TT

“We believe this action, or lack of action, from the management is outrageous. It's poor judgment in terms of business, but it's also very costly from a financial point of view,” Sasja Beslik, head of responsible investments at Stockholm-based Nordea, told the AFP newswire.

The announcement came after Volkswagen (VW) group admitted on Thursday that it had manipulated emissions tests of its cars in Europe.

Earlier in the week its CEO stepped down following a scandal over tests in the USA.

It was not immediately clear how many cars in Scandinavia might have been affected by the scandal.

READ ALSO: Just how important are cars to the Germans?

German Transport Minister Alexander Dobrindt told reporters in Berlin on Thursday that government investigators sent to investigate at VW's headquarters had received the latest admission from company officials.

He said that officials would “carry on working intensively to find out exactly, together with VW, in detail which vehicles are affected so that we can further inform the public.”

Dobrindt said that most of the vehicles involved in the manipulation had 1.6 or 2-litre diesel engines.

VW is “working on” a list of the affected models, but “can't yet say when it will be published,” a spokesperson for the car firm told German tabloid Bild.

The EA 189 motors involved in the emissions scandal are also found in Audi's A1, A3, A4 and A6 cars, an Audi spokesperson also confirmed to the tabloid.

Dobrindt did not say whether the vehicles affected would have to be removed from circulation.

But he added that cars from other manufacturers would now be tested to see if the problem is more widespread.

Nordea is one of the biggest banks in Scandinavia with 11 million customers.

It has made a point of promoting an ethical business strategy in recent months following a scandal which linked its CEO with free hunting trips earlier this year.

Five things to know about Germany's 'dieselgate' scandal

Exposed in 2015

On September 18th, 2015, the US Environmental Protection Agency (EPA) reported that VW had installed illegal “defeat devices” in hundreds of thousands of engines in the United States since 2009.

The software — used in the Volkswagen, Porsche, Audi, Seat and Skoda brands — helped the cars meet exhaust pollution standards when monitored in tests even though their emissions actually exceeded the limits.

It meant that some cars spewed out up to 40 times more harmful nitrogen oxide — linked to respiratory and cardiovascular diseases — than legally allowed.

The company later admitted that 11 million diesel vehicles worldwide, including 8.5 million in Europe and 600,000 in the United States, had been fitted with the software, most of them in the VW brand.

SEE ALSO: 'Dieselgate': German prosecutors charge former Audi boss with fraud

Legal fall-out

VW chief executive Martin Winterkorn, who stepped down five days after the scandal broke, was in April 2019 charged with serious fraud, unfair competition and breach of trust.

Eight former and current executives and an Audi official have been charged in the United States, including Winterkorn.

Audi chief executive Rupert Stadler was charged in July 2019 with fraud, falsifying certifications and illegal advertising in connection with the “defeat devices”.

Former Audi head Rupert Stadler at a press briefing in 2018.

VW's guilty plea to a US criminal case in March 2017 settled its legal entanglements there, bringing to around $22 billion the amount it agreed to pay in fines and compensation to owners and dealers and for environmental clean-up.

The group still faces investigations and lawsuits around the world, in Europe the countries include Britain, France, Germany, Italy and Poland.

Costs for VW

The scandal has so far cost VW around €30 billion in fines, compensation and buybacks, mainly in the United States.

The company announced a net loss of nearly €1.6 billion in 2015, its first in 20 years, after setting aside billions to cover the costs of the dieselgate.

In June 2018 it agreed to pay a €1 billion fine in Germany, admitting its responsibility for the diesel crisis.

Audi agreed in October 2018 to pay an €800 million fine and Porsche was in May 2019 ordered to pay a fine of €535 million.

Other carmakers?

Tests in the wake of the scandal found that diesel engines by other carmakers were also more polluting on the road than during testing.

But none have so far admitted to mass cheating.

However Mercedes-Benz maker Daimler was in June 2018 ordered to recall 774,000 diesel vehicles across Europe because they too were fitted with illegal “defeat devices”.

Fiat Chrysler agreed in January 2019 to a pay $515 million to settle claims it installed the software.

And in February 2019 German prosecutors fined high-end carmaker BMW 8.5 million euros over diesel cars with higher harmful emissions than allowed, though they found no criminal wrong-doing.

Opel is also being investigated.

A worker holds up a Volkswagen badge at the VW plant in Wolfsburg. Image: DPA

Market reaction

A study released in March 2017 said that pollution from 2.6 million rigged VW cars sold in Germany would likely cause 1,200 premature deaths in Europe because of the excess emissions.

In Germany more than 410,000 customers are demanding compensation, as are
investors.

More generally, European drivers appear to have largely shrugged off the controversy while VW sales have fallen in the United States.

VW said in July 2019 it expects “slightly higher” unit sales for the year than in 2018.

SEE ALSO: VW sees steady profits in 2018 results

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