British bank Standard Chartered is rushing to reach a settlement within days over charges it hid transactions tied to Iran and is set to resume talks with U.S. regulators on Monday, sources familiar with the situation said.
The London-based bank's U.S. legal team have got as far as discussing an amount with regulators, indicating progress has been made before a Wednesday deadline, the sources told Reuters.
Standard Chartered could be forced to pay a fine of up to $1-billion to settle the charges, analysts said last week, although there has been speculation that this figure could be higher to assuage the New York banking regulator pressing the case.
New York's Department of Financial Services alleged last week that Standard Chartered hid transactions tied to Iran and the regulator's head, Benjamin Lawsky, ordered the bank to explain why it should not lose its licence at a hearing scheduled for Wednesday.
"It looks like, rather than fight this in the courts, they're looking to resolve this, hopefully ahead of Wednesday," said Investec analyst Vivek Raja.
The bank is awaiting information on whether executives will be required to attend and chief executive officer Peter Sands remains in Britain, a source close to the situation said.
Shares in Standard Chartered were up 1.5 per cent to 1,346.5 pence at 1045 GMT, the top riser in Britain's FTSE 100 on hopes of an early resolution which would take away the uncertainty of a damaging legal dispute and a higher fine.
Britain's financial regulator said it remained in close contact with the bank and U.S. regulators.
Politicians have also been in close contact over the affair as the loss of its New York banking licence would be a devastating blow for Standard Chartered, effectively cutting off direct access to the U.S. bank market.
Standard Chartered vehemently disagrees with the agency's allegation the bank improperly processed $250-billion tied to Iran, which Mr. Lawsky cited in his order issued Aug. 6. The heart of his order, however, alleges the bank violated state laws when it concealed records of transactions from bank examiners.
The talks could still collapse, and the hearing also could be postponed to allow more time for negotiations.
The bank, meanwhile, was already co-operating in a separate probe dating to 2010 that included the U.S. Justice Department and the Manhattan district attorney. That investigation is aimed at determining whether Standard Chartered violated U.S. sanctions laws and talks on a settlement have been taking place separately from the state discussions.
A settlement with New York would end a period of turmoil for the bank and law enforcement officials and likely would result in a multimillion-dollar fine for Standard Chartered. A settlement with federal officials could also result in a multimillion-dollar fine.
Officials for the Justice and Treasury departments and the Manhattan district attorney either weren't available for comment or declined to comment.
Mr. Lawsky's order cited communications between Standard Chartered officials about the reputational and legal threats to the bank if it kept doing business with Iranian clients.
Mr. Lawsky's department and Standard Chartered declined to comment.
Faced with similar accusations, some banks prefer to settle quietly. Barclays PLC, Credit Suisse Group, Lloyds Banking Group, JPMorgan Chase & Co. and ING Bank NV had agreed in prior years to settlements totalling nearly $2-billion into how those banks allegedly processed money or assets tied to sanctioned countries.
Standard Chartered, by comparison, said last week that Mr. Lawsky's "interpretation" that the bank had improperly handled Iranian transactions was "incorrect as a matter of law."
Mr. Lawsky's office alleged the bank had hidden from regulators some $250-billion in improper transactions tied to Iran. The bank said that total amount that didn't adhere to U.S. sanction laws was less than $14-million.