STOCKHOLM — Swedbank's board backed its chief executive on Friday after seeing the results of an external report into the Swedish bank's alleged involvement in money-laundering in the Baltics.

Several banks have been dragged into a scandal at Danske Bank, whose Estonian branch was used for 200 billion euros ($227 billion) of suspicious payments between 2007 and 2015, knocking their shares and fueling investor fears.

Swedbank's second largest shareholder Mutual insurance company Folksam, which has a 6.96 percent stake, also said it was satisfied with the findings in the report.

Forensic Risk Alliance (FRA) was hired by Swedbank last month to investigate media allegations that at least 40 billion Swedish crowns ($4.3bn) of suspicious payments moved between accounts held at its Baltic branches and Danske Bank accounts.

"After reviewing the FRA Update, the board confirms its continued confidence in the CEO and her ability to lead and manage the bank's work in the fight against money laundering," Swedbank chairman Lars Idermark said in the statement.

The FRA inquiry, published by Swedbank but heavily redacted, was limited to the 50 clients identified in a Swedish Television report and did not include findings of a previous internal and undisclosed report or cover allegations made against Swedbank by activist fund manager Bill Browder.

Swedbank said it would continue to strengthen its anti money-laundering capabilities, adding that it had flagged some 3,800 suspicious transactions to local authorities in the Baltics in 2017 and 2018, while business dealings with 886 non-resident customers had been terminated in the region.

"We are quite satisfied," Folksam Chief Strategist on Responsible Investment Carina Lundberg Markow, told Reuters. "It seems like Swedbank has been in compliance with the rules, but it is not up to us to decide that. That has to be decided by the financial authorities".

Swedbank's board said it would conduct a deeper review in cooperation with "relevant authorities", without giving details.

"The important thing is that we feel secure in the way we have worked with this issue in the relation to the possible 50 clients," Swedbank CEO Birgitte Bonnesen told Reuters.

FRA said searches in Swedbank's systems had been done by the bank on behalf of FRA and that it had not been provided with Swedbank's internal report.

Investment bank Keefe, Bruyette & Woods said in a note to clients that it was positive that no "smoking gun" was found in the initial investigation but that "considerable further work will be required to clarify the situation comprehensively."

Shares in Swedbank were down 0.5 percent at 0824 GMT, underperforming the European bank index. — Reuters