IRAN – Fed probes RBS over dealings with Iran

FEDERAL authorities in the US are investigating the Royal Bank of Scotland (RBS) for possible breaches of Iran sanctions in a probe that has already led to the departure of a senior risk manager, says a report by Financial Times.

 

The bank uncovered the alleged failings after chief executive Stephen Hester initiated an internal review not long after his arrival three years ago.

 

The case adds to a series of UK, European and Japanese banks coming under scrutiny by regulators over allegations of illicit dollar transactions with Iran before tighter rules were introduced in the US in 2008.

 

The revelation comes on the heels of a settlement by the UK rival Standard Chartered, which agreed to pay a $340m fine to the New York State’s Department of Financial Services.

 

Unlike Standard Chartered, however RBS is not under investigation by Benjamin Lawsky, the New York state regulator who snubbed other supervisors by pressing ahead with the recent regulatory order and settlement.

 

RBS’s ongoing internal review has seen the departure of a risk manager and led to internal criticism over control of the bank’s regional compliance units, one person close to the matter said.

 

The probe marks the latest blow for RBS following a series of mishaps including an IT failure, widespread mis-selling of retail and small business products and its involvement in the scandal over the alleged manipulation of Libor interest rates.

 

Refusing to comment on the matter, RBS instead referred to its half-year report where it said it “has initiated discussions with UK and US authorities to discuss its historical compliance with applicable laws and regulations, including US economic sanctions regulations”.

 

“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 any particular period,” it added in the report.

 

On the other hand, Germany’s Commerzbank said its past transactions involving Iran remained under investigation and it was co-operating with US federal and New York authorities.

 

Sumitomo Mitsui Financial Group, one of Japan’s largest lenders, told investors in a securities filing that a “limited number” of transactions with countries subject to US sanctions had been identified and voluntarily disclosed to US authorities.