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Last updated: December 6, 2012 9:29 am
Standard Chartered expects to pay another $330m to resolve all outstanding investigations into its US sanctions breaches, in addition to the $340m it has already handed over to the New York state Department of Financial Services.
The emerging markets-focused bank on Thursday said it was close to concluding settlement talks with four US regulators to give shareholders an idea of the penalty they will have to pay to close the matter.
Richard Meddings, finance director, said the deal was expected by the end of the year and would not be limited to its activities in Iran, which were the focus of the first fine.
“It is for Iran and other countries where we have been looking at our historic sanctions compliance,” he said, without giving further detail about which of its past international dealings had also been contentious.
“The discussions are going well, they are active,” he said, adding that the bank did not expect to face regulatory action in any other country over the matter.
Shares in StanChart up 1.04 per cent at £15.04 in mid-afternoon trading in London following the news of the expected deal, still below the peak of £15.67 they achieved in August before the affair blew up.
Analysts at Bank of America Merrill Lynch said they had previously expected the remaining settlements to cost $600m rather than the $330m now envisaged: “The potential settlement hopefully brings the saga to an end allowing the bank to move on.”
The regulators with which StanChart said it was close to agreeing a settlement are the Federal Reserve, the Office of Foreign Assets Control, the Department of Justice and the New York district attorney’s office.
Mr Meddings said the charge would probably be taken in its current financial year, which concludes at the end of December.
In August, StanChart was accused of hiding illegal transactions with Iran by the New York state Department of Financial Services, which had broken ranks with other regulators to pursue the British group.
The move caused StanChart’s shares to fall heavily as investors feared that it might lose its state banking licence, but the $340m settlement announced with the state regulator later that month dispelled those concerns and sparked a rally.
StanChart disclosed the likely cost of the second penalty in a trading statement, saying income for the year was likely to show “high single-digit” percentage growth, or double-digit growth when adverse currency movements are stripped out.
Pre-tax profit would grow at a “mid single-digit rate”, it said, although this did not take into account the expected settlement cost. There had been no new material bad loan provisions so far in the second half of the year, it added.
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