Danske Bank has agreed to sell its remaining Estonian portfolio to local bank LHV.
This marks an end to a unit that was at the centre of one of Europe's biggest ever money laundering scandals.
In February last year Estonia's financial regulator ordered Denmark's biggest bank to leave the country after the lender admitted that €200 billion in suspicious payments had been made via its Tallinn branch.
The bank is still being investigated by authorities in the US and Europe about the scandal.
LHV said it would buy Danske's corporate and public sector credit portfolio in Estonia for €19m below the volume of the portfolio at the time of the transaction, which is due in October 2020 when the credit volume is seen at €280m.
Danske sold its private loans portfolio to LHV in a similar deal last year.
"According to LHV's assessment, this is a strong credit portfolio with relatively low capital requirements for the loans involved with local governments," LHV said in a statement.
A spokeswoman for Danske said the Danish bank will have a few outstanding loans to clients in Estonia when the deal is completed, and these loans would be handled from Lithuania.
Since the money laundering scandal emerged in 2018, Danske has pulled out of Russia and most of the Baltics.
The spokeswoman said the number of Danske clients in Estonia is now 1% of the total number of customers two years ago.
LHV said it will raise a total of €250m to finance the transaction, and said it would possibly raise €15m in share capital through an additional share issue.
"The loan portfolio of LHV will grow by about 15% and the importance of the public sector as part of LHV's business will increase by leaps and bounds," Madis Toomsalu, CEO of LHV Group said.