Standard Chartered has set aside $900 million for potential penalties relating to investigations into the bank's practices in the UK and US.
The provision will cover the UK bank's estimates for potential penalties from investigations over US sanctions violations, currency trading issues and financial-crime controls, the company said. Standard Chartered has been bracing for a possible US fine related to past dealings with Iran, and the charge may indicate a settlement is close.
StanChart also included in the provision a £102.2m (€117.7m) fine from Britain's Financial Conduct Authority related to historical financial crime controls. It said it was considering its options in relation to the penalty, according to a filing to the Hong Kong Stock Exchange.
The filing is the first time the bank has quantified the possible cost of the investigations. Previously it said only in filings that it was "not practicable" to estimate the financial impact because the range of potential outcomes was too broad.
Its chief executive officer Bill Winters is due to present his plan to improve profitability when the bank reports full-year results next week. He may also announce a new round of cost cuts to boost a share price that's down more than 35% since he took over in June 2015.
The provision could wipe out the majority of the bank's second-half profit. Joseph Dickerson, an analyst at Jefferies Financial Group Inc, said in a note this week he estimated the firm would post pre-tax profit of US$1.4 billion in the last six months of 2018, excluding litigation costs.
StanChart has been the subject of multiple investigations by US authorities into its dealings with Iran, which is the subject of heavy US sanctions.
Standard Chartered settled a currency trading investigation last month and said it received a notice from the UK's Financial Conduct Authority (FCA) over the financial-crime controls. The FCA plans to impose a penalty of £102 million (S$179.7 million), the London-based lender said. The bank said it's still considering its options related to the FCA's notice.
in March 2018 the Monetary Authority of Singapore (MAS) imposed penalties on Standard Chartered of SGD 6.3m ($4.8mn) for breaches of its anti-money laundering and countering the financing of terrorism (AML/CFT) requirements.
Other global banks are grappling with soaring legal expenses. A French court on Wednesday ordered UBS Group AG to pay a record €4.5bn over a tax-evasion case, the biggest fine for a Swiss bank. While UBS said it will appeal, the penalties make up more than its entire profit for 2018.