NY ops to cost Stanchart $340m
Bank’s deal, seen as pragmatic move, pushes up HK shares at Wed’s close
with Bloomberg Television on Wednesday. For their total fine, “you might multiply by three or four; you might see $1 billion potentially.”
In his announcement on Tuesday, Lawsky said Standard Chartered “agreed that the conduct at issue involved transactions of at least $250 billion.” The $340 million fine will go to Lawsky’s agency, DFS, and the New York state.
In Hong Kong, Standard Chartered’s shares rose as much as 6.8 percent and the share finally closed nearly 3.6 percent higher to HK$171.7 a share in Wednesday’s trading. However, the share price is still nearly 9 percent below where they were before the allegations hit the bank early last week.
“Standard Chartered has probably done the right thing. You just pay up and get on with life however innocent you feel you are. Otherwise, it’s something that could hang over you for years,” said Hugh Young, Asia managing director at Aberdeen Asset Management, Standard Chartered’s thirdbiggest shareholder according to Thomson Reuters data.
The settlement agreed by the bank is equal to less than 9 percent of its first-half pretax profit. At the latest levels, Standard Chartered’s market value is around $3.5 billion less than it was before Lawsky’s allegations.
Ian Gordon, an analyst at Investec Securities in London, said the risks of further regulatory costs “appear sufficiently contained” to allow the bank’s shares to build on a rally from their lows after Lawsky brought his case last week. “Standard Chartered’s management team has conducted themselves admirably in the face of extreme provocation,” he said.
“Crucially, the settlement eliminates the risk of Standard Chartered losing its banking and clearing license,” Shailesh Raikundlia, an analyst at Espirito Santo Investment Bank in London, said. That “would have significantly impaired their wholesale banking operations, especially transaction banking and trade finance.”
Lawsky on Aug 6 called Standard Chartered a “rogue institution” that had broken US sanctions on Iran, saying it hid Iran-linked transactions with a total value of $250 billion from regulators in the last 10 years. Standard Chartered strongly denied the allegations last week, saying illegal transactions just totaled less than $14 million.
Standard Chartered is just one of the major banks that has been penalized by the US financial regulatory authorities. Lloyds Banking Group and Credit Suisse Group have previously agreed to pay settlements of $ 350 million and $ 536 million, respectively. ING Bank NV paid a settlement of $ 619 million. HSBC Holdings Plc currently is under investigation by US law enforcement, according to bank regulatory filings. In 2010, Barclays Plc paid $298 million to settle a joint probe with federal and New York authorities. Reuters contributed to this story