* Bank agrees to settlement with New York regulator
* Detailed terms expected shortly, StanChart says
* Action by new agency sparked transatlantic row
NEW YORK, Aug 14 (Reuters) - Standard Chartered Plc
will pay $340 million to New York's bank regulator over
transactions linked to Iran, in a speedily arranged deal likely
to cheer its shareholders.
The deal with New York Superintendent of Financial Services
Benjamin Lawsky still left the British bank facing a separate
probe of Iran-linked transactions by other U.S. authorities.
The deal on Tuesday capped a week of transatlantic tension
and a furore over why a state agency had upstaged the other
authorities.
The resolution also averted a hearing on Wednesday at which
the bank had been called to demonstrate why its license to do
business in New York should not be revoked.
Ian Gordon, an analyst at Investec Securities in London,
said that the risk 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 have conducted
themselves admirably in the face of extreme provocation," Gordon
said.
The bank's shares rose 2.74 percent to close at 1,370 pence
on Tuesday, before Lawsky's announcement.
Lawsky on Aug. 6 called Standard Chartered a "rogue
institution" that had broken U.S. sanctions on Iran, saying it
hid Iran-linked transactions with a total value of $250 billion
from regulators.
Lawsky's order came like a bolt from the blue, the bank
said, hitting its share price and bringing top executives
hurrying back to London from vacation. Bank of England Governor
Mervyn King said that Lawsky was out of step with other U.S.
authorities. And Standard Chartered Chief Executive Peter Sands
strongly denied the allegations, saying illegal transactions
totaled less than $14 million.
In his announcement on Tuesday, Lawsky said the bank had
"agreed that the conduct at issue involved transactions of at
least $250 billion." But he gave no details on what protections
the deal gave Standard Chartered. ()
Standard Chartered confirmed that the two sides had reached
an agreement, including the payment of $340 million, and said
detailed terms would be concluded soon.
"It was a pragmatic decision in the best interest of
shareholders and customers," a spokesman for the bank said.
In addition to the civil penalty, Lawsky said the bank
agreed to an outside monitor for at least two years to check on
controls on money-laundering at its New York branch.
Lawsky's aggressive stance heightened his public profile
just months after the Department of Financial Services, the
agency he heads, was created out of the state's banking and
insurance regulators.
Within minutes of the announcement, New York Governor Andrew
Cuomo lauded the "effectiveness and leadership" of the new
agency.
"New York needed a tough and fair regulator for the banking
and insurance industries to protect consumers and investors,"
Cuomo said.
But Lawsky has also drawn fire by jumping ahead of a
two-year probe into Standard Chartered by the U.S. Treasury, the
Federal Reserve, the Justice Department, and New York
prosecutors.
"It's very unfortunate this wasn't done as a global state
and federal settlement," said Ed Wilson, a former senior
attorney at the U.S. Treasury Department.
As negotiations with Lawsky progressed last week and this
week, the bank held separate talks with other authorities. It
had hoped to land a deal on both fronts, but Lawsky's solo
announcement Tuesday made clear that had not happened.
Underscoring a continuing divide with Lawsky, the other
authorities issued short statements saying they would continue
to work together.
"Treasury will continue working with our state and federal
partners to hold Standard Chartered accountable for any
sanctionable activity that may have occurred," the Treasury
Department said.
The U.S. Federal Reserve said it "continues to work with the
other agencies on a comprehensive resolution."
The Justice Department defended its record in fighting money
laundering and said it was working with its regulatory and other
partners "to determine what actions might be appropriate in this
matter."
The Manhattan district attorney's office also said it would
continue to work with its partners on sanctions violations.
Jimmy Gurule, a former undersecretary for enforcement at the
Treasury Department who is now a law professor at Notre Dame,
said Lawsky may have acted out of frustration that federal
regulators were moving too slowly.
"I think, in part, there was probably some exasperation,
some frustration on the part of the New York state regulators of
federal regulators," Gurule said.
In the end, Lawsky's office won a settlement that was on 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 joint
probe with federal and New York 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 U.S. law enforcement, according to
bank regulatory filings.
