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Standard Chartered shares rally on US settlement
Published at 16 August 2012, 10:01 GMT
The bank, accused of laundering as much as $250bn, had been threatened that its US banking licence may be revoked. Shares opened 4.3% higher in London trade before easing slightly. The bank had admitted that some of its transactions did break US sanctions, but said the amount totalled just $14m. Ian Gordon, an analyst with Investec Securities, said the risk of further regulatory costs appeared to be "sufficiently contained" and that the deal may help the bank's shares rebound. Oriel Securities, a stockbroker, upgraded Standard Chartered's shares to "buy" from "reduce", helping the recovery in investor confidence in the bank. The BBC's New York business correspondent Mark Gregory said the $340m to be paid was a "hefty penalty, but nothing like as hefty as it could have been" if the two parties had not negotiated a settlement. The deal has removed the risk of the bank losing its state banking licence, investors said.

'Engage constructively'
According to the terms of the settlement, Standard Chartered will pay a "civil penalty" of $340m to the New York State Department of Financial Services (DFS). It will also install a monitor for at least two years who will evaluate money-laundering controls at the bank's New York branch and report directly to the regulator.

"The New York State Department of Financial Services (DFS) and Standard Chartered Bank have reached an agreement to settle the matter raised in the DFS order dated August 6, 2012," a statement from the regulator's superintendent said. "The parties have agreed that the conduct at issue involved transactions of at least $250bn."

A short statement from Standard Chartered simply confirmed a settlement of $340m had been reached. "A formal agreement containing the detailed terms of the settlement is expected to be concluded shortly," it added.

The bank also said it continued to "engage constructively" with other US authorities.

"In addition, DFS examiners shall be placed on site at the bank," the statement said.

Finally, the settlement provided for permanent staff at the bank's New York office to audit any money-laundering controls.

Last week, New York's DFS alleged that the US unit of the bank had illegally hidden 60,000 transactions with Iran worth $250bn over nearly a decade. It accused the London-based bank of being a "rogue institution" for breaking US sanctions against Iran.

The bank's chief executive Peter Sands, said at the time that he was "completely surprised" by the ferocity of the DFS's attack, which he described as "disproportionate".

He did, however, admit that 300 transactions did break US sanctions. "This was clearly wrong and we are sorry that they happened," Mr Sands said.
BBC News - Business
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