Standard Chartered is bracing for a potential penalty of around $1.5 billion from US authorities for allowing customers to violate Iran sanctions, sources said.
That amount is a preliminary assessment based on some of the communications between the bank and the regulators, the people said. Final discussions to resolve the matter have not yet begun, they said. The allegations relate to breaches dating from at least five years ago.
The shares sank after the potential fine exceeded some analysts’ expectations. American authorities have been keeping an eye on Standard Chartered since 2012, when the lender entered into a deferred prosecution agreement (DPA) to resolve US allegations that the bank facilitated business with Iranian parties. The US extended the DPA in 2014.
“As previously disclosed, we continue to cooperate fully with the investigation regarding our historical sanctions compliance, and are engaged in ongoing discussions with the US authorities,” the bank said.
A coalition of enforcement and regulatory agencies, including the Justice Department, New York’s Department of Financial Services and the Manhattan District Attorney, have finished their investigation and may announce the resolution by the end of the year, sources said in August.
The bank’s shares extended their decline, closing 3.3 per cent lower in London trading Monday. They’ve tumbled 21 per cent this year.
A $1.5bn fine would be triple the $500 million penalty forecast by analysts at Keefe, Bruyette & Woods. Analysts Edward Firth and Richard Smith lowered their 2018 forecast for Standard Chartered’s common equity Tier 1 ratio, a measure of financial strength, to 13.3 per cent from 13.7 per cent. They reiterated their market perform rating in a note to clients.
Source: The National