Good news for Standard Chartered’s UK listed shares this morning with the company having reached a $340m settlement with the State of New York Department of Justice over allegations that it was negligent/facilitated a decade’s flow of up to $250bn of Iranian funds through the US, violating long-running sanctions against the country. This avoids the CEO having nasty showdown with the Department of Financial Services today and also means the bank can keep its key New York banking license without which it would surely be a materially different institution. The civil penalty is easily payable after the company reported H1 2012 profits before tax of almost $4bn (+10%). Nonetheless, the banks hitherto strong reputation (and above all its share price) has taken a bad bruising and investor expectations that this draws a line under the whole saga is premature. Other US regulators including the US Treasury, DoJ and FBI will pursue the case and may well bring the allegations back into focus at a further date and could ultimately increase the total settlement figure much further. Whether the other authorities take as aggressive an approach as the DFS is unsure. It is understood they were surprised with the latter’s approach given that the two year investigation was still ongoing. Having recovered from lows of 1090p, uncertainty is nonetheless likely to remain an overhang for some time, hindering any regain of 1600p recent highs any time soon. Today’s reaction may be a nice knee-jerk, but unlikely to have momentum.

Shares currently trading at 1412p, +43p/+3.1%

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