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US probes Commerzbank

July 8, 2014

In their quest against banks accused of helping rogue states do business in American dollars, regulators in the US have set their sights on another European financial giant: Germany's Commerzbank.

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Commerzbank's headquarters in Frankfurt, Germany
Image: Fotolia/Max Diesel

Germany's second-largest lender, Commerzbank, is in settlement talks with American regulators over accusations it dealt with countries blacklisted by Washington, the New York Times reported Monday.

While the details of such a compromise have yet to be ironed out, they are expected to include a fine of at least $500 million, the newspaper said, quoting unnamed sources familiar with the talks.

An agreement with state and federal authorities in New York and Washington could be announced as early as this summer, the Times said.

The negotiations are the latest development in a decades-long investigation into European banks' financial dealings with pariah states that were in violation of US sanctions.

Familiar charges

The charges against Commerzbank mirror those against France's largest bank, BNP Paribas, which last week ponied up a record $8.9 billion (6.5 billion euros) and plead guilty to criminal charges.

Authorities fined the Paris-based bank for processing transactions in dollar denominations on behalf of companies in Iran, Cuba and Sudan.

More than anything, the investigations into some of the world's largest lenders highlights the importance of doing business in American dollars, even for foes of the US.

What the case could mean for German-American ties is unclear. Germany owns 17 percent of Commerzbank - the result of a taxpayer bailout in early 2009 - but has yet to indicate whether it intends to use its diplomatic weight to muscle out a more favorable settlement.

Commerzbank not the only German target?

The negotiations with Commerzbank will also likely be a precursor to similar talks with Germany's largest financial institution, Deutsche Bank, which is also suspected of channeling money through its New York office for pariah states.

Both Commerzbank and Deutsche Bank have in the past acknowledged that they were being investigated by the Americans, the Times reported.

Last week, Deutsche Bank said it was cooperating with authorities in the US but denied knowing the full scope of the investigation.

cjc/uhe (Reuters, AFP)