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Commerzbank Faces $650 Million Fine For Violating U.S. Sanctions on Iran

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Commerzbank is nearing a settlement with U.S. authorities over sanctions-related allegations that have first been raised four years ago.
  • Why it matters

    Why it matters

    The possible penalty for Germany’s second-largest private bank would be considerably lower than the $8.9 billion fine slapped on France’s BNP Paribas.

  • Facts

    Facts

    • Commerzbank is accused of conducting business deals with the Iranian state shipping line, Irisl, between 2002 and 2007.
    • The bank’s stock rose on the news, as the markets had feared a stiffer fine.
    • Negotiations are complicated because many U.S. jurisdictions are involved, including the Justice and Treasury departments, the Federal Reserve Board, the Manhattan district attorney’s office and New York bank regulators.
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Negotiations between Commerzbank and U.S. authorities for allegedly violating trade sanctions against Iran are coming to a costly conclusion. According to the Bloomberg and Reuters news agencies, the bank is preparing for a fine of around $650 million (€502 million).

Both reports were based on anonymous sources. Citing ongoing settlement negotiations, the bank said it would not comment. Earlier this summer, news leaked that Commerzbank could be penalized between $500 million (€386 million) and $800 million (€618 million) in return for U.S. authorities ending their investigation.

The negotiations are complicated because a jumble of jurisdictions are involved. They include the Justice and Treasury departments, the Federal Reserve Board, the Manhattan district attorney’s office and New York bank regulator, Benjamin Lawsky, who alone is said to be demanding about $300 million (€231 million) in penalties. The bank is accused of doing business with the Iranian state shipping line, Irisl, between 2002 and 2007 in violation of U.S. sanctions.

Investors reacted with relief to the possible settlement. Commerzbank stock rose 5.6 percent on the news on Friday and took top spot on the DAX index of leading German companies. Some market players expected a stiffer penalty. “$650 million is at the bottom end of what was feared,” said Guido Hoymann, an analyst for Metzler Bank. “Many haven’t forgotten the shock over BNP Paribas’ huge fine.”

Earlier this summer, the French bank was slapped with a record $8.9 billion fine for violating sanctions. Unlike BNP, however, the German bank probably wouldn’t have to admit to criminal charges, according to the New York Times.

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