Financial: Standard Chartered: Iran claims bill 'will top pounds 400m'Jill TreanorGuardian
Standard Chartered now expects to pay a total of $670m (pounds 415m) to US regulators to settle allegations that it breached sanctions with Iran, it warned yesterday.
In a trading update, the bank admitted that it expected to hand over another $330m on top of the $340m paid to New York's department of financial services (DFS) for scheming to hide about $250bn in transactions from the authorities over a decade. The DFS claimed this left the financial system susceptible to "terrorists" and "drug kingpins", although the bank insisted it had not breached sanctions to the extent claimed by the regulators.
The bank, led by Peter Sands, admitted that pretax profits would be battered by the fines. "Profit before tax for the group is expected to grow at a mid-single-digit rate. Excluding the NY DFS settlement, profit before tax is expected to be up by a double-digit percentage," the bank said.
The bank's shares rose almost 1% to pounds 15 because profits, though dented, will still be up on last year. It will be the 10th straight year of increases, which continued even through the financial crisis.
"The group remains in active and constructive discussions with the other US agencies on the resolution of the group's historical US sanctions compliance. We anticipate that these discussions will conclude very shortly and are likely to result in the group paying a sum of approximately $330m," the bank said. The other authorities include the Federal Reserve and the Office of Foreign Assets Control.
Richard Meddings, the bank's finance director, said that he expected the settlement to come "very soon".
Until the DFS allegations, the bank was regarded as having a reputation untarnished by the financial crisis, but it settled with the US regulator in August after allegations that one of its top bankers - believed to be Meddings - had exclaimed "You fucking Americans" when warned about the potential violations of sanctions. The bank insists the quote is inaccurate.
Sands had been forced to cut short his summer holiday to fly to New York to negotiate a settlement with the DFS at a time when the UK's banks were suffering other embarrassments. Barclays had just been fined pounds 290m for manipulating Libor, while HSBC had been accused of laundering money through the US for drug barons in Mexico and has since admitted that the penalties for these alleged offences could reach at least pounds 940m.
Sands tried to focus on the trading update before its full-year results in February. "Standard Chartered is on course to deliver another strong set of full-year results for 2012. We continue to focus on the basics of banking, on maintaining a very strong and conservatively positioned balance sheet, and on the disciplined execution of our strategy. We continue to see significant opportunities across our markets in Asia, Africa and the Middle East," he said.
The bank, unlike its rivals, is taking on staff and expects to employ an extra 1,800 by the end of the year.