UPDATE 2-Danske shares slide as investors spooked by U.S. criminal inquiry

Danske Bank's deepening money laundering scandal dragged its shares to a four-year low on Friday as Denmark's biggest bank sought to calm investors about the impact of a U.S. criminal investigation into its Estonian branch.

The involvement of the U.S. Department of Justice (DOJ) in an inquiry into alleged money laundering at its Estonian branch is very different to the case of Latvia's failed ABLV, Danske Bank's interim chief financial officer Morten Mosegaard said.

U.S. authorities in February accused ABLV of covering up money laundering, leading to the Latvian bank being denied dollar funding after the U.S. Treasury proposed invoking a section of the USA Patriot Act, leading to its swift collapse.

"It's very difficult to see any comparison between the two cases," Mosegaard told Reuters, adding that Danske Bank had long since closed its activities in Estonia.

Last month Danske Bank said that payments totalling 200 billion euros ($231 billion), many of which were "suspicious", had moved through the branch between 2007 and 2015.

Mosegaard's comments follow the publication of a letter from U.S. investor Bill Browder to the U.S. Treasury in which he asked them to investigate Danske Bank and to undertake steps to consider designating it for special measures under the USA Patriot Act, which was used in the ABLV case.

Browder, whose complaints have led to investigations by Danish and Estonian prosecutors, confirmed to Reuters on Friday that he had sent the letter on Sept 24, after Danske Bank's disclosure on Thursday of the DOJ investigation.

Mosegaard declined to comment on Browder's letter, but asked whether he expected the U.S. authorities to apply the same sanctions on Danske Bank as they had on ABLV, said:

"I don't anticipate that. We have a constructive dialogue with the authorities."

"We are in a very early phase of the dialogue with the U.S. authorities so it's very difficult to speculate on the outcome," Mosegaard said, without giving further details.

Mosegaard said Danske Bank was working with a "solid network of correspondent banks" which enable it to access dollars.

"We see no sign that we will not be able to handle transactions going forward in cooperation with our correspondent banks," he said.

MIRROR TRADES

Earlier the Financial Times reported that the bank had executed up to 8.5 billion euros of so-called mirror trades for Russian customers in 2013, which made the bank 10 million euros, raising concerns about a significant U.S. penalty and hitting Danske Bank's already battered shares.

Deutsche Bank was previously hit by a $630 million fine from authorities in the United States and the UK for using mirror trades to allegedly launder Russian money.

In another blow to Danske Bank, Credit Suisse on Friday downgraded it to 'neutral' from 'outperform' and cut its target price to 199 Danish crowns from 244 crowns.

Danske shares traded 7.2 per cent lower at 147.15 crowns at 1330 GMT.

"The investment case and key reason for buying Danske and taking anti-money-laundering risk are gone as buybacks no longer support shares," Credit Suisse said, with reference to the Danish bank's decision to end a share buyback programme to bolster its capital as a result of the scandal.