StanChart agrees settlement with US bank regulator
NY bank regulator fined the British bank £216.9 million for its Iran-linked transactions
By CFOWorld staff | CFO UK | Published 11:23, 15 August 12
New York banking regulator has fined Standard Chartered $340 million (£216.9 million) because of its Iran-linked transactions, ending a week of mounting tension over the authority’s role in going public.
The settlement helped push up the Asia-focused lender's shares, which had fallen last week on the news.
It is equal to less than 9 percent of its first-half pre-tax profit. At the latest levels, Standard Chartered's market value is around $3.5 billion less than it was before Lawsky's allegations.
The deal with New York Superintendent of Financial Services Benjamin Lawsky on Tuesday caps a week of transatlantic tension and a furore over why a state agency had upstaged other authorities. The British bank still faces a separate probe of its Iran-linked transactions by other US agencies.
The resolution also averted a hearing on Wednesday at which the bank had been called to show why its licence to do business in New York should not be revoked.
Standard Chartered's Hong Kong shares rose as much as 6.8 percent to HK$177, still nearly 6 percent below where they were before the allegations hit the bank early last week.
Lawsky on 6 August called Standard Chartered a "rogue institution" that had broken US sanctions on Iran, saying it hid Iran-linked transactions with a total value of $250 billion from regulators.
Lawsky's order came out of the blue, the bank said, hitting its share price and bringing top executives hurrying back to London from vacation. Bank of England governor Mervyn King said Lawsky was out of step with other US authorities. And Standard Chartered CEO Peter Sands strongly denied the allegations, saying illegal transactions totalled less than $14 million.
In his announcement on Tuesday, Lawsky said Standard Chartered "agreed that the conduct at issue involved transactions of at least $250 billion". But he gave no details on what protections the deal gave Standard Chartered.
Standard Chartered confirmed that the two sides had reached an agreement, including the payment of $340 million, and said detailed terms would be concluded soon.
In addition to the civil penalty, Lawsky said the bank agreed to an outside monitor for at least two years to check on controls on money-laundering at its New York branch.
photo credit: Reuters
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