STOCKHOLM (Reuters) – Swedbank (SWEDa.ST) reported a bigger-than-expected drop in quarterly earnings on Wednesday, hit by the costs of hiring more compliance staff and dealing with the fallout of its alleged involvement in a massive money laundering scandal.

Sweden’s oldest retail bank earlier this year dismissed its CEO and accepted the resignation of its chairman after its Estonian business was caught up in dirty money allegations that have engulfed Danish peer Danske Bank (DANSKE.CO).

Swedbank is alleged to have processed suspect gross transactions of up to 20 billion euros ($22 billion) a year from mostly Russian non-residents through Estonia from 2010 to 2016.

The bank has admitted to past failings in money-laundering controls, but not given details. It is the subject of a joint probe by Swedish and Baltic regulators and is also being investigated by at least two entities in the United States.

Swedbank said its total costs in the third quarter of its financial year jumped by 29% year on year to 5.2 billion Swedish crowns ($539 million). That was partly due to hiring more compliance staff and engaging two financial forensic firms as well as lawyers to deal with the investigations it faces.

“Coming to grips with the issue of money laundering and other financial crime is a huge focus for me,” newly appointed Chief Executive Officer Jens Henriksson told reporters. “We have raised the tempo in our efforts to rectify the deficiencies we have had in our protection against money-laundering.”

Third-quarter net profit fell to 4.66 billion crowns from 5.53 billion a year earlier, and missing analysts’ mean forecast of 4.81 billion crowns in a Refinitiv poll.

Henriksson said costs associated with handling the scandal would total around 1 billion crowns in 2019, making it tougher to meet the bank’s 15% return on equity target.

Swedbank shares, down around 40% since the scandal broke, were 5% lower at 139.8 crowns at 0800 GMT, underperforming the European banking index .SX7P, which was down 0.7%.

Henriksson said an internal report and the investigations by Swedish and Estonian watchdogs were expected to be concluded early next year. The status of the U.S. probes, which some investors fear could come with hefty fines, were more unclear.

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“Other banks that have faced alleged money laundering investigations have told me it can take anything from one to five years but we don’t control that process,” Henriksson said.

Third-quarter net interest income, which includes income from mortgages, rose to 6.55 billion crowns from 6.33 billion a year ago and just below the poll forecast of 6.60 billion.

“It’s not great in terms of these extra costs,” Aqil Taiyeb, banking analyst at Jefferies International, said of the results, adding lower loan losses to some extent offset the higher costs.

Additional reporting by Colm Fulton; Editing Niklas Pollard and Christian Schmollinger

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