U.S. sanctions-violation fine for Credit Suisse raises Iran alarm
By Lisa Jucca and Steve Slater
ZURICH/LONDON, Dec 16 (Reuters) – A surprise $536 million settlement by Credit Suisse to a U.S. probe over financial dealings with Iran should only do short-term damage to the Swiss bank, but others could now be in the line of fire.
Credit Suisse said late on Tuesday it was in advanced talks over a settlement to a U.S. investigation into payments made between 2002 and 2007 involving countries and entities hit by U.S. economic sanctions. A person familiar with the issue said the probe related to dealings with Iran.
The Financial Times said U.S. authorities are believed to be investigating nine banks in relation to Iran, without citing sources.
Britain’s Lloyds Banking Group said it was continuing talks with U.S. authorities but did not expect to make any further payment in regard to charges that it faked records so clients from restricted countries, including Iran, could do business with it.
Lloyds agreed in January to forfeit $350 million to U.S. authorities in connection with the charges.
Other banks to have highlighted potential risks from U.S. economic sanctions in the past include Royal Bank of Scotland and Barclays.
Credit Suisse, which avoided state aid and emerged as one of the banking sector winners from the financial crisis, said the expected settlement would likely result in a 445 million Swiss franc ($429 million) charge this quarter, or about 360 million francs after tax.
After strong interim earnings this year, fourth-quarter results were expected to be weak due to the charge and an expected slowdown in private bank inflows due to an Italian tax amnesty, said Kepler Capital Markets analyst Mathias Bueeler.
“While we are a bit surprised about the size of the amount, this is a one-off payment that should have no further implications on Credit Suisse’s business or franchise,” Bueeler said.
The settlement would be the second heavy penalty paid by a Swiss bank to U.S. authorities this year after UBS agreed in February to pay $780 million to avoid criminal charges for helping thousands of rich Americans evade taxes.
The person familiar with the situation said Credit Suisse was prompted to issue the surprise release related to the U.S. settlement talks on concern the news had been leaked.
Lloyds said on Wednesday it was continuing talks with the U.S. Office of Foreign Assets Control (OFAC) to complete its investigation, but said OFAC had said the amount paid to the U.S. Department of Justice and the New York County District Attorney’s Office will be credited towards satisfying any penalty it imposes.
“Accordingly, Lloyds Banking Group does not believe there will be any payment to OFAC as a result of any resolution and does not anticipate any further enforcement actions following this settlement,” it said in a statement.
RBS said in its 2008 annual report that ABN AMRO, the Dutch bank RBS led a takeover of in 2007, was in talks regarding OFAC compliance procedures. ABN AMRO had reached an agreement in principle with the U.S. Department of Justice but negotiations were ongoing, it said at the time.
Barclays said in its 2009 half-year results in August that it was cooperating with U.S. authorities in regard to investigations into its compliance with U.S. economic sanctions.
Barclays said it had been conducting an internal review of its conduct with respect to U.S. dollar payments involving sanctioned countries and the review was ongoing. It could not predict the timing or financial impact of any resolution outcome, which could be substantial, it said. ($1=1.039 Swiss Franc)
(Additional reporting by Sam Cage and Rupert Pretterklieber in Zurich; Clara Ferreira-Marques in London; editing by Simon Jessop) ((firstname.lastname@example.org; +41 58 306 7354))