Commerzbank agrees to pay U.S. authorities $1.45 billion as the latest big European bank to acknowledge sanctions and other violations relating to Iran and Sudan. And, as Hayley Platt reports, UBS braces for more litigation with more provisions for legal costs.
It's a bitter pill to swallow but one Germany's second largest bank has agreed to take. Commerzbank will pay US authorities $1.4 billion over banking violations. CMC Market's Michael Hewson. SOUNDBITE: Michael Hewson, Chief Market Analyst, saying (English): "I think the key thing going forward is have Commerzbank learned from this, have they modified their procedures so that this doesn't happen again and I think that's what the markets are looking. I think it's all about the bank making the right noises, putting the right procedures in place to ensure that these sorts of things don't happen again." It's the latest big bank to acknowledge moving funds through America's financial system on behalf of countries like Iran and Sudan. The authorities agreed to defer criminal charges against the bank for three years as long as it abides by the terms of its agreements. No individual charges were brought, but five of the bank's employees will be fired or resign as a consequence. Prosecutors say Commerzbank concealed more than $250 million it moved to, primarily, Iranian and Sudanese customers at the beginning of 2002. Iran's state-sponsored shipping line is said to be one customer. Commerzbank adds to a long list of some of the world's biggest banks charged for falling foul of US sanctions - in settlements said to be worth around 12 billion dollars. The biggest payout by far: French bank BNP Paribas, which agreed to an $8.9bn penalty last year. It's also reported that Swiss bank UBS has upped its litigation provisions - in case it has to fork out more for a US antitrust lawsuit over allegations of collusion in the five trillion dollars a day foreign exchange market. SOUNDBITE: Michael Hewson, Chief Market Analyst, saying (English): "The banking sector as a whole has had a rough ride, it will continue to be closely scrutinised so looking at UBS as a separate part of the problem I don't think they're anymore worse or better then anyone of their peers." It has though hurt the bank's quarterly profits which have been revised down by 105 million Swiss francs or $104 million dollars.