Deutsche cuts back correspondent banking after Danske scandal

* Deutsche Bank (IOB: 0H7D.IL - news) has shrunk correspondent banking business

* Correspondent banking portfolio 40 pct smaller than 2016 (Updates with further quotes from testimony and background)

FRANKFURT, Feb 4 (Reuters) - Deutsche Bank has sharply scaled back its role as a correspondent bank, an executive said on Monday of a business line that has dragged it into a money laundering scandal involving Danske Bank (LSE: 0NVC.L - news) .

Deutsche Bank's global correspondent banking portfolio is now around 40 percent smaller than it was in 2016, Stephan Wilken, its head of anti-financial crime and anti-money laundering said.

Wilken told a committee of the European Parliament that Deutsche Bank's portfolio of correspondent banking customers it deems as high risk is around 60 percent smaller than it was in 2016.

Danske Bank is under investigation over suspicious payments totalling 200 billion euros ($229 billion) from 2007 until 2015 from its Estonia branch.

Deutsche Bank has said it acted as a correspondent bank for Danske Bank in Estonia, meaning it helped transfer funds on behalf of the Danish lender from Estonia to places like New (KOSDAQ: 160550.KQ - news) York.

Deutsche Bank has said it had no indication of misconduct in the case, but is cooperating with authorities.

Wilken also said that in Russia, Deutsche Bank had reduced active correspondent banking relationships by around 75 percent since 2016, while it has exited such business in Moldova, Estonia and Latvia. ($1 = 0.8751 euros) (Reporting by Tom Sims; Editing by Christoph Steitz and Alexander Smith)