Standard Chartered reaches $340 million Iran settlement
Top bank reaches deal with New York prosecutors over allegations of inappropriate Iranian transactions.
Standard Chartered will pay $340 million to New York's bank regulator over transactions linked to Iran, in a speedily arranged deal likely to cheer its shareholders.
The deal with New York Superintendent of Financial Services Benjamin Lawsky still leaves the British bank facing a separate probe of Iran-linked transactions by other US authorities.
The deal on Tuesday capped a week of transatlantic tension and a furore over why a state agency had upstaged the other authorities.
The resolution also averted a hearing scheduled for Wednesday at which the bank had been called to demonstrate why its licence to do business in New York should not be revoked.
Ian Gordon, an analyst at Investec Securities in London, said that the risk of further regulatory costs "appear sufficiently contained" to allow the bank's shares to build on a rally from their lows after Lawsky brought his case last week.
"Standard Chartered's management team have conducted themselves admirably in the face of extreme provocation," Gordon said.
Lawsky on August 6 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 like a bolt from 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 that Lawsky was out of step with other US authorities. And Standard Chartered CEO Peter Sands strongly denied the allegations, saying illegal transactions totaled less than $14 million.
In his announcement on Tuesday, Lawsky said the bank had "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.
"It was a pragmatic decision in the best interest of shareholders and customers," a spokesman for the bank said.
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.
Lawsky's aggressive stance heightened his public profile just months after the Department of Financial Services, the agency he heads, was created out of the state's banking and insurance regulators.
Within minutes of the announcement, New York Governor Andrew Cuomo lauded the "effectiveness and leadership" of the new agency.
"New York needed a tough and fair regulator for the banking and insurance industries to protect consumers and investors," Cuomo said.
But Lawsky has also drawn fire by jumping ahead of a two-year probe into Standard Chartered by the U.S. Treasury, the Federal Reserve, the Justice Department, and New York prosecutors.
Jimmy Gurule, a former undersecretary for enforcement at the Treasury Department who is now a law professor at Notre Dame, said Lawsky may have acted out of frustration that federal regulators were moving too slowly.
"I think, in part, there was probably some exasperation, some frustration on the part of the New York state regulators of federal regulators," Gurule said.