Commerzbank Facing $600m-$800m in Fines to Procure US Sanctions Settlement

Germany's Commerzbank could be forced to cough up between $600m and $800m to resolve investigations into its compliance with US sanctions.

Commerzbank, which is 17% owned by the German government, is understood to be negotiating a deferred prosecution agreement with US authorities, for which it will pay the financial penalty, Reuters reported.

The fine includes a demand from New York's top banking regulator, Benjamin Lawsky, for more than $300m (£175m, €220m) from the bank, unnamed sources told the news agency.

The US Department of Justice, the Treasury Department, the Federal Reserve and the Manhattan District Attorney are also negotiating with the German lender.

A settlement is expected within a few weeks.

Commerzbank's stock has lost some 8.06% in Frankfurt trade so far this year.

Violations

A part of the US investigation is examining Commerzbank's dealings with the Islamic Republic of Iran Shipping Lines.

The German firm has been accused of conducting business with the state-sponsored shipping firm despite knowing that it was sanctioned by the US. The Iranian firm was sanctioned in 2008 for allegedly supporting Iran's involvement with weapons of mass destruction.

Pursued by Reuters, a Commerzbank spokesperson refused to comment on the allegations and the size of a potential settlement.

The Justice Department, the Manhattan DA's office and Lawsky's New York Department of Financial Services (DFS) refused to comment.

Other authorities could not be reached for comment.

BNP Paribas

The German bank will be the latest bank to settle with US authorities.

On 30 June, French bank BNP Paribas agreed to pay a record $8.9bn for concealing transactions worth billions of dollars with Sudan, Iran and Cuba - countries facing US

Commerzbank is expected to post a pre-tax profit of €1bn this year, according to Thomson Reuters.

Standard Chartered

Over half a dozen foreign banks have settled with US authorities over sanctions violations in the past five years. They have parted with more than $12bn, according to Manhattan District Attorney Cyrus Vance.

British lender Standard Chartered, accused of hiding 59,000 Iranian transactions worth $250bn from regulators, paid $667m to US authorities in 2012.

The US probe into Commerzbank's activities began in 2010.