Danske: A Contrarian Play Within The European Banking Sector With An Attractive Risk-Return Profile

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About: Danske Bank A/S ADR (DNSKY), Includes: DB, ING, SCGLY
by: Labutes IR
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Labutes IR
Long/short equity, mutual fund manager, foreign companies, banks
Summary

Danske is a well-run bank in Europe, but this has been overshadowed by the money laundering scandal at its Estonian branch.

It's quite difficult to estimate the total fines it will face, but excess capital position gives me confidence that long-term fundamentals will not be affected.

Its current valuation seems to already discount a large fine, while its upside could be up to 50% if litigation is settled in-line with current expectations.

Danske’s asymmetric risk-return profile makes it an interesting play right now for investors that look beyond news headlines.

Danske Bank (OTCPK:DNSKY) (OTCPK:DNKEY) is a quality bank in Europe, but its current investment case is deeply overshadowed by the Estonian money laundering scandal. Its depressed valuation seems to already price-in