Finanstilsynet (Financial Supervisory Authority of Norway) has issued a violation penalty to Danske Bank A/S for market manipulation in connection with the issuance of a government bond, according to a press release on Finanstilsynet’s website. Norges Bank manages government debt on behalf of the Ministry of Finance.

The unusually volatile market rate when the government bond, issued in February 2023, was valued, was decisive in determining the interest rate paid by the government. Shortly afterwards, Norges Bank alerted Finanstilsynet to abnormal market movements.

In its decision, Finanstilsynet concludes that at the time of valuation the market rate was driven up by Danske Bank to an abnormal or artificial level, and that trades were made as part of a deliberate strategy in a situation in which the bank profited from a high effective interest rate.

“Norges Bank takes a grave view of the incident described in Finanstilsynet’s decision. Well-functioning financial markets are important for Norges Bank and government debt management. Trust between market participants is fundamental. It is advantageous for the market that Finanstilsynet uncovers and follows up illegal and unacceptable conduct,” says Gaute Langeland, Executive Director of Markets at Norges Bank.

The Ministry of Finance has delegated all operational management of government debt to Norges Bank. Norges Bank shall, based on a mandate laid down by the Ministry of Finance, meet the government’s borrowing requirements and manage outstanding government debt.

Since the incident, Norges Bank has closely followed up Danske Bank and their handling of it.

“Nevertheless, some of the details described in Finanstilsynet’s decision are new to us. We are currently engaged in constructive talks with Danske Bank concerning further follow-up,” concludes Gaute Langeland.