The shares rose 3% when the market opened in London, even though the bank agreed to pay a $340m (£220m) penalty – a sum expected to rise once the bank settles with other US authorities investigating the breaches, which allegedly took place between 2001 and 2007.
Analysts had expected the shares – which have slumped from £16 since the New York Department of Financial Services (DFS) levelled the damning charges last Monday – to rise because, despite the embarrassment of the fine, the bank's crucial banking licence was preserved.
But the Chief Executive, Peter Sands, remains under intense pressure because the increase to £14.10 still leaves the bank's shares much further to go to regain their losses.
Analysts at UBS said: 'The aggregate of this fine, plus any additional recompense to other regulators, could total less than 1% of Standard Chartered's equity and the DFS fine represents around 6% of our current earnings forecast for Standard Chartered, suggesting the company will be able to absorb this cost and still deliver a 10th successive year of record profits'.
The settlement was made by Sands even though last week he had come out fighting, insisting the DFS order contained inaccuracies. It remains an embarrassment for the bank that only two weeks ago was claiming it was 'boring' with a better culture than rivals hit by scandals.
A week ago, the DFS said that Standard Chartered had left the US financial system 'vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity'.
Sands had flown in to New York on Monday ahead of a hearing with the DFS scheduled for Wednesday, but that has been adjourned. The bank is still in discussions about the final settlement but it is expected that inspectors from the DFS will be installed at the bank's office in New York and the bank will 'permanently install personnel' in New York solely to ensure it adheres to money laundering laws.
Benjamin Lawsky, the head of the DFS, claimed that Standard Chartered schemed to hide 60,000 transactions valued at about $250bn which breached sanctions with Iran. Sands admitted to only 300 breaches, with a much smaller value of about $14m.
Lawsky had said he could withdraw the bank's licence but has dropped the threat although his statement announcing the settlement insisted both sides had agreed that the 'conduct at issue' covered $250bn – the full amount of his original order.
The UBS analysts added: 'While this is not final closure on the matter with Standard Chartered continuing to be investigated by other US/UK regulatory agencies, it was the DFS action that elevated the issue of non-compliance here to a point that potentially threatened Standard Chartered's ability to operate its US clearing business through NY and thus provided the greatest threat to its business model'.
The fine dwarfs the $5m that the bank had argued its breaches should require it to pay on the basis of a scale used by the US government's office of foreign assets control (Ofac) with which the bank is still in talks.
Standard Chartered has admitted since 2010 that it has been discussing potential breaches of sanctions but was caught out by the decision by the DFS to publish its allegations while Sands was on holiday.
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