Standard Chartered agrees to settle a US investigation into claims it laundered billions of dollars worth of prohibited transactions with Iran, paying a civil fine of US$340 million.
Standard Chartered to pay $340 million to settle Iran furore
Standard Chartered's share price leapt yesterday after the banking group announced a US$340 million (Dh1.24 billion) settlement with US regulators over alleged violations of sanctions against Iran.
Investors were cheered as the fine was a fraction of the size feared by analysts and the bank escaped losing its US banking licence.
The British lender's London-listed shares, which lost up to 30 per cent in the 24 hours after news of the investigation broke, rose 4.4 per cent to 1,431 British pence after the settlement was announced.
Last week, the New York state department of financial services launched an investigation into the bank, saying it had turned a blind eye to transactions with Iran that violated US sanctions over the past decade, which it alleged were worth about $250bn.
"The parties have agreed that the conduct at issue involved transactions of at least $250bn," the regulator said.
The settlement is an about-face from a week ago when Standard Chartered mounted a vigorous defence disputing aspects of the regulator's allegations, saying it had identified just $14m of transactions that may have violated sanctions, which it attributed to clerical errors. Standard Chartered also agreed to the regulator's demands to place a monitor at the bank's New York office for at least two years to evaluate its money-laundering controls.
The bank remains subject to probes by the US Treasury, Federal Reserve and justice department. Reuters reported yesterday the bank was pursuing a collective settlement with federal regulators.
Late on Tuesday, Standard Chartered said it was working with US officials.
"The group continues to engage constructively with the other relevant US authorities. The timing of any resolution will be communicated in due course."
The settlement led to the adjournment of a hearing before the New York superintendent of financial services, which had been due to take place yesterday.
The loss of the bank's New York banking licence would have stripped it of access to US dollar-denominated trade, which would have severely affected its core business of trade financing.
But analysts remained concerned over the potential size of future fines.
"We still see risk that [the bank] will ultimately have to pay substantially higher fines ... Standard Chartered could also be burdened by further oversight costs," said analysts at Mitsubishi UFJ Securities International.
Last month, HSBC said it had set aside $700m to cover fines expected as a result of a US Senate probe into $19.4bn of its transactions involving Iran.
Unlike Standard Chartered, HSBC has admitted to all of the Senate's findings and made a full public apology.
Fines levied by US regulators against international banks for sanctions-busting have totalled $2.1bn since 2009, according to the Senate's report on HSBC.
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