By agreeing to pay $340m to settle the New York State financial regulator's allegations of sanctions-busting, Standard Chartered has raised more questions than it has answered.
In financial terms, the bank has reason to be relieved. Regrettable it may be, but the fine is more than affordable for a company with profits nearing $4bn in the first half of the year. The penalty is also small by comparison with either the $250bn of Iranian money Standard Chartered allegedly laundered or with the levies paid by other banks for similar violations.
The damage to the bank's reputation, however, will not be easily repaired. Standard Chartered's shares may have seen a healthy bounce yesterday but they are still way below what they were. And the management's swift volte-face hardly helps.
Last week, executives were protesting that all but 0.1 per cent of the disputed operations were entirely legal and predicting a fine of $5m. Just a few days later, New York's Department of Financial Services is unequivocal that "both parties have agreed the conduct at issue involved transactions of at least $250bn", and the bank has coughed up several hundred millions of dollars.
Standard Chartered's chief executive, Peter Sands, may have decided – spooked by the regulator's threat to revoke the bank's New York licence – that the best move was just to pay up and move on. But if the original protestations of innocence were justified, the DFS's actions look like blackmail. Alternatively, if the bank's inquiries in the intervening days undermined its original optimism, Mr Sands has much to explain. Meanwhile, his capitulation cannot but imply guilt, which only adds to the difficulty of reputational recovery.
Nor will the matter go away so easily. Not only does the DFS allegedly have evidence of similar activities with other proscribed countries, including Libya and Sudan. Other investigations into its dealings with Iran are also still under way, not least by the US Treasury and the Department of Justice. The bank may have clung on to its licence, but the sanctions-busting affair is far from over.