Standard Chartered eyes joint deal after backing down in U.S.

Wed Aug 15, 2012 11:28am EDT
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By Matt Scuffham and Sinead Cruise

LONDON (Reuters) - Standard Chartered is pursuing a collective settlement with other U.S. authorities after backing down and agreeing to pay $340 million to New York's financial regulator following mounting pressure from shareholders.

The bank said it made a "pragmatic decision" to settle having seen its share price slump by more than 30 percent at one stage last week following accusations that it concealed Iran-linked transactions worth a total of $250 billion.

With the New York settlement agreed subject to formalities, the bank's U.S. lawyers Sullivan & Cromwell will look to accelerate talks with other agencies to enable Standard Chartered to draw a line under an episode that has caused lasting damage to its reputation.

"Negotiations are going on between the other agencies, and we are talking to them. It is safe to assume there will now be a collective agreement," a spokesman for the bank said, declining to put a timeframe on the process.

Having cut short a family holiday in Canada last week, Chief Executive Peter Sands is now pushing for a comprehensive deal that removes lingering uncertainty. The bank is still the subject of probes by the U.S. Treasury, the Federal Reserve, the Justice Department and New York prosecutors.

Shares in Standard Chartered were up 4.9 percent at 1,437.5 pence at 1330 GMT, still 8 percent below their value prior to accusations being made against the bank on August 6.

"I think Standard Chartered wanted to settle because the share price had become destabilized," said one of the bank's 30 biggest investors. "Prior to that, I think they believed they had good legal grounds to resist a settlement of, say, under $200 million on the basis of the history of these cases."

New York's Financial Services Superintendent Benjamin Lawsky had described Standard Chartered as a "rogue institution" for breaking U.S. sanctions by concealing information about funds linked to Iran.   Continued...

Employees of Standard Chartered leave a branch of the bank in central Seoul August 9, 2012. REUTERS/Lee Jae-Won