StanChart in talks to settle Iran laundering probeBy: CARRICK MOLLENKAMP and MATT SCUFFHAM
NEW YORK/LONDON – British bank Standard Chartered is trying to reach an early settlement over charges it hid US$250 billion of transactions tied to Iran, backing down under pressure from US regulators and shareholders.
Despite chief executive Peter Sands’s strong denial of the charges levelled by New York’s Department of Financial Services (DFS), the bank’s US legal team has got as far as discussing a settlement figure with regulators ahead of a Wednesday showdown with the DFS head Benjamin Lawsky, sources familiar with the situation told Reuters. Investors say their preferred option would be for the bank to bite the bullet and achieve an early resolution, rather than engage in a battle that could involve countersuits from the bank.
“Ultimately, they will all wheel their wagons around and, whatever happens, Standard Chartered is going to get a fine,” one of the bank’s largest 25 investors told Reuters. “For banks to sue regulators is a really bad idea – a really, really bad idea.”
Lawsky ordered the bank to explain why it should not lose its New York banking licence at the hearing scheduled for Wednesday. While Sands also fiercely objected to Lawsky’s description of Standard Chartered as a “rogue institution”, the bank appears willing to put its frustrations to one side in pursuit of an early settlement, as the loss of the licence would effectively cut off direct access to the US bank market.
Standard Chartered could be forced to pay a fine of up to US$1 billion to settle the charges, analysts said last week, though there has been speculation that this figure could be higher to assuage the New York regulator.