LONDON â€" Investors in Standard Chartered breathed a collective sigh of relief on Wednesday.
The positive reaction came after the British bank agreed to a $340 million fine related to charges that the bank laundered hundreds of billions of dollars in money with Iran and lied to regulators.
The agreement ends speculation that Standard Chartered might lose its New York banking license. The bank's top executives had been expected to defend its actions in a hearing on Wednesday, which was postponed after the settlement was announced.
The British bank, which mainly operates in fast-growing emerging markets, has operated a New York office since 1976. That office primarily operates a dollar-clearing business, processing around $190 billion a day for clients from around the world.
Standard Chartered may still face fines from other U.S. regulatory authorities, but analysts said the agreement with New York's Department of Financial Services had drawn a line under many of the accusations.
The British bank and the New York regulator have been at loggerheads over the level of money laundering activity at the firm.
New York authorities had claimed that Standard Chartered schemed for nearly a decade with Iran to hide 60,000 transactions worth $250 billion from regulators. The British bank has maintained the transaction value of the laundering activities had totaled only $14 million.
“Whilst disproportionate, the settlement protects shareholder and customer interests against the regulatory assault,†Ian Gordon, a banking analyst at Investec in London, said in a note to investors. “In our view, Standard Chartered has acted with pragmatism and integrity in the face of extreme provocation.â€
Shares in the British bank rose around 5 percent in early market trading in London on Wednesday, though the stock is still down 9 percent since the money laundering allegations were first announced in early August. Sta ndard Chartered's shares had dropped as much as 25 percent - their sharpest one-day decline in more than two decades - a day after the allegations were first made on Aug. 6.
Standard Chartered is not the first European bank to face money-laundering charges.
Rival British firm HSBC has set aside $700 million to cover the potential fines, settlements and other expenses related to allegations from U.S. authorities. The Dutch bank also agreed to a $619 million fine in June for processing financial transactions for Cuban and Iranian companies.
