Whatever the reasons that lay behind it, Standard Chartered’s rush to settle with New York’s banking regulator is an embarrassing climbdown.
Only a few days ago the bank was threatening to sue New York State’s Department of Financial Services for reputational damage over claims that it had misled regulators in transactions subject to US sanctions on Iran.
StanChart no doubt had strong commercial reasons to seek a rapid deal. The $340m settlement allows it to avoid a potentially damaging face-off between Peter Sands, chief executive, and outspoken regulators. The sharp rally in the bank’s shares yesterday signalled that, as far as investors are concerned, it has done the right thing. Had the regulator revoked StanChart’s New York banking licence as it had threatened to do, the bank’s business of emerging market trade finance would have suffered a mortal blow. But the hefty settlement has punctured StanChart’s defiance and casts doubt over the bank’s confidence in its case.