Peter Sands, the chief executive of Standard Chartered, has arrived in New York as the bank attempts to negotiate a settlement with the US regulator that accused it of "scheming" to hide $250bn of transactions with Iran.
Sands does not yet know if he will personally attend a hearing with New York's department of financial services (DFS) that has been scheduled for Wednesday. The bank is meanwhile seeking to clarify whether the discussions will be held in private or public.
The Standard Chartered CEO said on a hastily convened conference call last week that the 27 pages of accusations published by the DFS, led by Benjamin Lawsky, contained a number of "factual inaccuracies". The DFS claimed Standard Chartered broke sanctions with Iran by moving 60,000 payments worth $250bn around the financial system but Sands argues the scale of the sanctions breach is much smaller – just under 300 payments worth $14m.
A rule breach of that size would indicate a fine of around $5m on the basis of the scale used by the US government's office of foreign assets control which is also investigating. Analysts expect the fine to be larger, however. "Our working assumption is that it will be coerced into paying a settlement running to several hundred million dollars," said Ian Gordon, banks analyst at Investec.
Sands and his colleagues were caught on the back foot by the DFS when it announced a week ago that it believed Standard Chartered had broken US sanctions with regard to trading with Iran.
The 27 pages released by Lawsky's office contained emails between Standard Chartered officials and an exchange in which the head of risk was said to have replied to a colleague warning him of the perils of breaking sanctions: "You fucking Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"
The current finance director, Richard Meddings, was head of the risk at the time – October 2006 – although the bank insists that the remarks are not representative of what was said.
Shares in the bank stabilised on Monday, ending little changed at 1333p after a rollercoaster ride since the DFS made the allegations. At one point last Tuesday the shares were down almost 25% because of fears the bank could lose its licence in New York and its management team would need to quit.
Ideally, Standard Chartered would aim to settle with all the regulators in the US – which also include the department of justice – at once, although it is not clear if this is possible before Wednesday when the DFS has set the hearing.
Although Standard Chartered had been noting in its annual reports since 2010 that it was in "discussions" with regulators over historic breaches of sanctions, it had been thought a settlement was still some way off until the DFS levelled its accusations in public.
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