[July 08, 2014]By
Thomas Atkins and Alexander Hübner
FRANKFURT (Reuters) - U.S.
authorities have begun settlement talks with Germany's
Commerzbank and Deutsche Bank over their dealings with
countries blacklisted by the United States, extending a
crackdown on European banks at a delicate point in
U.S.-German relations.
The talks with state and federal authorities have just begun, a
source with direct knowledge of the regulatory investigations told
Reuters, and the timing of a deal is unclear.
Deutsche Bank and Commerzbank declined to comment.
Washington has come down hard on European banks which have evaded
their sanctions, imposing a record fine on France's BNP Paribas <BNPP.PA>
last week and stoking resentment among bankers and officials at what
they see as U.S. imperialism.
Commerzbank, Germany's second-largest lender, is 17 percent owned by
the German government and the settlement talks could further strain
ties between Berlin and Washington, already at a low ebb due to
allegations a German man had worked as a double agent for U.S.
intelligence.
Commerzbank is accused by U.S. authorities of transferring money
through its U.S. operations on behalf of companies in Iran and Sudan
and could pay at least $500 million in penalties, according to the
New York Times.
The newspaper, which first reported the settlement talks, said a
deal could be struck as soon as this summer and could pave the way
for an agreement with Deutsche Bank. (http://nyti.ms/1xJyjeA)
Commerzbank would likely face a so-called deferred prosecution
agreement that would suspend criminal charges in exchange for the
financial penalty and other concessions, the report said.
The risk of a fresh wave of U.S. fines weighed on European stock
markets with Commerzbank down 3.5 percent and Deutsche 0.5 percent
weaker.
Reuters reported last week that Deutsche Bank, Banamex USA, the U.S.
arm of Citigroup Inc's <C.N> Mexican banking group Banamex, and two
major French banks - Credit Agricole <CAGR.PA> and Societe Generale
<SOGN.PA>, are among those being investigated by U.S. authorities
for possible money laundering or sanctions violations.
Investigations into the two French banks are not expected to be
completed until after a settlement with Commerzbank, the source told
Reuters.
FINES
After failing to land high-profile criminal cases stemming from the
2008-09 financial crisis, U.S. authorities have focused on other
types of criminal activity within the financial industry, including
money laundering, tax evasion and sanctions violations.
Last week, France's largest bank BNP Paribas pleaded guilty to two
criminal charges, agreed to pay $8.9 billion and have its right to
clear certain dollar transactions suspended in order to resolve
accusations it violated U.S. sanctions against Sudan, Cuba and Iran.
The size of the fine, the highest ever imposed for sanctions
violations, and the suspension have caused concern in Europe and
Asia that U.S. authorities are exploiting the dominance of the U.S.
dollar to impose their own rules and standards on foreign firms and
jurisdictions.
Reuters could not immediately reach the authorities conducting the
investigations - U.S. Department of Justice, New York State's
banking regulator and the Manhattan district attorney's office.
Commerzbank had 934 million euros ($1.27 billion) at the end of 2013
as provision for litigation risks, including a possible U.S. probe
into whether the bank breached sanctions.
Numerous other banks, including Standard Chartered, Lloyds Banking
Group and Credit Suisse Group have previously settled with U.S.
authorities over allegations they violated sanctions but their fines
pale in comparison to the near $9 billion penalty imposed on BNP
Paribas.
U.S. authorities said the size of the BNP fine reflected the extent
of the wrongdoing. BNP employees concealed more than $190 billion in
transactions between 2002 and 2012 for companies, governments and
people in Sudan, Iran and Cuba.
($1 = 0.7345 Euros)
(Additional reporting by Supriya Kurane in Bangalore, Karen Freifeld
in New York and Till Weber in Frankfurt; Writing by Carmel Crimmins;
Editing by Gopakumar Warrier and Anna Willardt)
