Commerzbank close to settling U.S. sanctions probes

By Reuters

Sep 04, 2014 02:17 AM EDT

German lender Commerzbank AG (CBKG.DE) is nearing agreement with U.S. authorities over its dealings with Iran and other countries under U.S. sanctions, sources familiar with the matter said.

The bank is expected to pay about $650 million to resolve the U.S. probes, one person said.

An announcement could come as soon as next week but is more likely within the month, the sources said. The sources did not want to be identified because negotiations are still underway.

Margarita Thiel, a spokeswoman for the Frankfurt-based bank, declined comment.

Reuters previously reported Commerzbank, Germany's second largest lender, was expected to pay U.S. authorities between $600 million and $800 million, including a demand for more than $300 million from New York's Department of Financial Services, headed by Benjamin Lawsky.

The New York regulator is likely to receive about $300 million, one source said on Wednesday.

The U.S. Department of Justice, the Treasury Department, the Federal Reserve and the Manhattan District Attorney's office also are negotiating. Authorities declined to comment when contacted by Reuters on Wednesday.

Commerzbank knowingly banked for the Islamic Republic of Iran Shipping Lines, one of the sources said. The state-sponsored shipping line was designated for economic sanctions by the U.S. in 2008 for supporting Iran's proliferation of weapons of mass destruction.

Commerzbank, which is 17 percent owned by the German government, is expected to enter into a so-called deferred prosecution agreement that would suspend criminal charges in exchange for a financial penalty and other concessions, the person said.

In the past five years, more than a half dozen foreign banks have settled with U.S. authorities over sanctions-related violations.

French lender BNP Paribas in June agreed to pay a record-breaking $8.9 billion over violations of sanctions and related conduct.

In 2012, Amsterdam-based ING Bank paid $619 million, then the highest penalty, followed by Standard Chartered Plc, (STAN.L) the British bank, which paid $667 million. (Last month, Standard Chartered was fined another $300 million, among other penalties, for lapses in its anti-money laundering controls since the 2012 settlements.)

Authorities have said the targeted banks stripped identifying information from incoming wires to avoid red flags that would have helped regulators police the transactions.

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