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By Esha Vaish and Johan Ahlander
STOCKHOLM, March 28 (Reuters) - Swedbank dismissed Chief Executive Birgitte Bonnesen on Thursday just before its annual shareholder meeting, after mounting investor criticism over allegations the bank was involved in money laundering in the Baltics.
The allegations against Swedbank first came to light in a media report last month and have sparked fears that the largest bank in the Baltic region will become embroiled in a scandal already engulfing rival Danske Bank, and face the threat of lawsuits, fines and other sanctions.
Bonnesen has repeatedly said she has confidence in the bank's anti-money laundering procedures and that Swebank had reported suspicious transactions to authorities.
But in the past few days, investors have become critical of Swedbank's handling of the issue, putting them on course for a showdown with management at the annual general meeting later on Thursday.
Investors have criticised Bonnesen over her responses to the allegations. Their discontent came to a head on Wednesday after the Swedish Economic Crime Authority decided to extend its Swedbank probe to include a charge of suspected fraud.
"The developments during the past days have created an enormous pressure for the bank. Therefore, the board has decided to dismiss Birgitte Bonnesen from her position," Swedbank Chairman Lars Idermark said on Thursday.
Reuters was not immediately able to reach Bonnesen to seek comment.
Swedbank's announcement of Bonnesen's dismissal came just an hour before the bank holds its annual general meeting.
Ahead of the meeting, three of Swedbank's top investors, in a rare public expression of discontent, said they would not grant Bonnesen freedom from liability for the 2018 fiscal year, leaving her position all but untenable.
Bonnesen's career path before she become CEO at Sweden's biggest retail bank included a role as the bank's chief audit executive between 2009 and 2011, which encompassed oversight of the bank's anti-money laundering policy. She then moved on to running the lender's Baltic operations until 2014.
Swedbank said Chief Financial Officer Anders Karlsson had been appointed on Thursday as acting CEO and would also continue to hold his CFO role until further notice. The bank also said it had begun a process to recruit a new permanent CEO. (Additional reporting by Johannes Hellstrom and Helena Soderpalm editing by Niklas Pollard/Keith Weir/Jane Merriman)