(Recasts with DNB appointing law firm, adds details)
OSLO, April 12 (Reuters) - DNB is to appoint an external law firm to look into the activities of its board after the government stepped up pressure on the bank to explain why it failed to prevent its Luxembourg arm from helping customers to set up offshore companies.
Norway's biggest bank has already done its own investigation into the issue, which concluded that DNB had failed to monitor the Luxembourg business properly.
This followed revelations about DNB's operations in the Panama Papers leaks.
"DNB has concluded that its own guidelines were breached, and says this should not have happened. That I agree to," Industry Minister Monica Maeland said in a statement on the case on Tuesday. "There are still unanswered questions in this matter," she said.
The Norwegian government is DNB's biggest shareholder with a 34 percent stake.
DNB Chairwoman Anne Carine Tanum said the case required thorough investigation.
"The ministry is asking the board to consider the need for an external review ... the Hjort law firm will be retained by the board to evaluate the case."
After the Panama Papers were published, DNB said it had helped customers to establish offshore firms in the Seychelles between 2006 to 2010. (Reporting by Terje Solsvik, editing by Gwladys Fouche and Jane Merriman)