London - US authorities are investigating Royal Bank of
Scotland over possible breaches of sanctions on Iran, as part of a crackdown in
which Standard Chartered has already agreed to pay a heavy fine for
transactions involving Tehran.
An RBS spokesperson referred on Wednesday to disclosures
alongside the bank’s half-year results earlier this month. These stated that
RBS had initiated talks with US and UK authorities on whether it complied with
economic sanctions on Iran, and that it could face a material impact from the
The inquiry raises the possibility of a hefty fine for the
part-nationalised British bank, which is also being investigated for its
involvement in the Libor rate rigging scandal, and will raise the pressure on
Chief Executive Stephen Hester.
Also on Wednesday, Germany’s Die Zeit newspaper reported
that Commerzbank expects it may face “considerably negative” consequences from
a US investigation into Iran sanctions violations. Citing a Commerzbank
securities filing, it said this could include a financial hit that exceeds
Commerzbank said it had not done business with Iran since
2007 and declined further comment.
In the disclosures accompanying the RBS half year results on
August 3, the British bank said it had “initiated discussions with UK and US
authorities to discuss its historical compliance with applicable laws and
regulations, including US economic sanctions regulations”.
These followed an internal review begun by Hester shortly
after his arrival at the bank in 2008.
“The investigation costs, remediation required or liability
incurred could have a material adverse effect on the group’s net assets,
operating results or cash flows in a particular period,” the bank said. RBS had
been making similar disclosures for the past 18 months, the spokesperson said.
The Financial Times reported on Wednesday that the US
Federal Reserve and Department of Justice were conducting the investigation,
citing several people close to the situation. It cited a person familiar with
the situation as saying one risk manager had already left the bank following
the internal review.
RBS, which is 82%-owned by the taxpayer, declined further
A spokesperson for the Federal Reserve said it could not
“comment on supervisory matters pertaining to individual institutions”. A
representative at the Justice Department did not respond to a request for
Standard Chartered last week agreed to pay $340m to the New
York bank regulator over transactions linked to Iran.
The British bank had been accused by the New York Department
of Financial Services of concealing $250bn in Iranian transactions.
In 2010, RBS agreed to pay $500m to settle similar
allegations by US federal authorities that ABN Amro, a Dutch bank RBS acquired
in 2007, had violated US sanction laws.
Analysts expect RBS to settle with US and UK regulators over
its involvement in the Libor scandal later this year. It has also endured
problems on the domestic front, with a computer systems failure causing massive
disruption to customers in June.
Shares in RBS were down 0.6%t to 236 pence at 09:05GMT.
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