STANCHART TO TAKE US $900M CHARGE
Provision to cover potential penalties from US probes, currency issues and financial-crime controls
STANDARD Chartered Plc (StanChart) will take a US$900 million (RM3.66 billion) charge tied to regulatory probes in its fourth-quarter results, a move that will erode earnings as its top executive prepares to unveil a turnaround plan.
The provision will cover the United Kingdom bank’s estimates for potential penalties from investigations over the United States sanctions violations, currency trading issues and financial-crime controls, the company said on Wednesday.
StanChart has been bracing for a possible US fine related to past dealings with Iran, and the charge may indicate a settlement is close.
Chief executive officer Bill Winters is due to present his plan to improve profitability when the bank reports full-year results on Tuesday. He may also announce a new round of cost cuts to boost a share price that’s down more than 35 per cent since he took over in June 2015.
The provision could wipe out the majority of the bank’s second-half profit. Joseph Dickerson, an analyst at Jefferies Financial Group Inc said this week that he estimated the firm would have posted a pre-tax profit of US$1.4 billion in the last six months of last year, excluding litigation costs.
Shares of StanChart slipped 0.2 per cent as of 10.37am, here.
Other global banks are grappling with soaring legal expenses. A French court on Wednesday ordered UBS Group AG to pay more than US$5 billion over a tax-evasion case, the biggest fine for a Swiss bank. While UBS said it would appeal, the penalties make up more than its entire profit last year.
StanChart settled a currency trading investigation last month and said it received a notice from the UK’s Financial Conduct Authority (FCA) over the financial crime controls. The FCA plans to impose a penalty of £102 million (RM541.31 million), said the lender. The bank said it was still considering its options related to the FCA’s notice.
In the US, authorities have been monitoring StanChart since 2012, when the lender paid US$667 million and entered into a deferred prosecution agreement to resolve allegations that it illegally processed transactions with Iranian parties.
The Justice Department has since extended the agreement multiple times, most recently in December, after saying the bank may have failed to disclose additional violations.