New York State announced that, as part of the settlement, Standard Chartered also admitted that the hidden transactions totaled at least $250 billion, as New York claimed, and not a mere $14 million as the bank said last week.
Also as part of the settlement, New York State dropped its threat to pull Standard Chartered’s license, which would have booted it off Wall Street.
But the agreement with New York State does not stop other investigations into Standard Chartered’s conduct that are being waged by federal agencies.
The announcement Tuesday capped a week-long transatlantic dispute over the investigation in which New York Superintendent of Financial Services Benjamin Lawsky had acted independently of US federal agencies.
The agreement also came after London-based Standard Chartered’s chief executive, Peter Sands, flew to New York to take personal control of the negotiations.
Lawsky had ordered the bank to demonstrate, at a hearing set for Wednesday, why its license to do business in New York should not be revoked. That hearing has now been canceled, Lawsky said in his statement Tuesday.
Sands last week strongly denied the key allegations, saying illegal transactions totaled less than $14 million. In his announcement Tuesday, Lawsky said the bank had “agreed that the conduct at issue involved transactions of at least $250 billion.”
Standard Chartered confirmed that the two sides had agreed on the terms of an agreement, including the payment of $340 million. In addition to the civil penalty, Lawsky said the bank agreed to install a monitor for at least two years to check on money-laundering risk controls in its New York branch.
As Sands’ negotiations progressed last week and this week, the bank held separate talks with federal authorities. The bank had hoped to reach a settlement on both fronts, but Lawsky’s announcement Tuesday made clear that had not happened.
The US Treasury Department issued a short statement saying it would keep pursuing its own inquiry and settlement with Standard Chartered.
The US Federal Reserve said it “continues to work with the other agencies on a comprehensive resolution.”
The Department of Justice declined to comment.
In the end, Lawsky’s office won a settlement that was on a par with fines paid by a handful of other banks that had improperly done business with sanctioned states such as Iran and Cuba.
In 2010, Barclays Plc paid $298 million to settle a US probe. Lloyds Banking Group and Credit Suisse Group have previously agreed to pay settlements of $350 million and $536 million, respectively. ING Bank NV of the Netherlands also paid a settlement. HSBC Holdings Plc currently is under investigation by US law enforcement, according to bank regulatory filings.
The settlement with New York State won’t bankrupt Standard Chartered. The fine of $340 million is less than 9 percent of the profits of $3.95 billion that the bank reported for the first half of 2012. But the bank could face further payments to the US federal governments when its probes are finished.
And what cannot yet be measured is the cost of the damage done by this case to the bank’s reputation and the willingness of others in the financial world to work with Standard Chartered.
