Standard Chartered Bank’s settlement with banking regulators in New York is a positive for the British bank, but it could still face further penalties from other authorities, says Moody’s Investors Service.
The rating agency says in a research note that the US$340 million settlement with the New York State Department of Financial Services (DFS) over alleged violations of financial sanctions against Iran is a positive credit development for the bank. However, it also notes that investigations by other bank supervisors in United Sates are ongoing, so further penalties remain a possibility.
“The settlement removes the immediate risk of the closure of Standard Chartered’s New York branch, or restrictions on its US dollar clearing operations, which had been threatened by the DFS,” Moody’s says. And, it says that the size of the monetary penalty, while large, is not material from a rating perspective.
However, as other bank supervisors in the US (Federal Reserve Group of New York, the district attorney of New York, and the Office of Foreign Assets Control) are still to conclude their investigations, further penalties remain a possibility, Moody’s says, so “the full extent of implications for Standard Chartered and its business operations in the U.S. are not yet clear.”
The rating agency plans to continue to monitor developments in the case, adding that concerted actions by regulators that indicate serious concerns over the bank’s control environment, or which meaningfully curtail its core business activities could have negative implications; as could any material loss of deposit funding.