The settlement negotiations are expected to last through the weekend and could result in a resolution by next week, these people said. The negotiations are at a delicate stage and could collapse, they added.

One set of talks is with federal officials while a separate negotiation is taking place with the New York bank regulator, underscoring a divide that exists between New York officials and other regulators, the sources said.

The negotiations come after a rancorous week that began when Benjamin Lawsky, superintendent of the New York Department of Financial Services, alleged in an order on Monday that the bank processed thousands of illegal transactions tied to Iran and that Standard Chartered had covered up its actions using incomplete or false records.

Lawsky demanded that Standard Chartered officials appear at his office next Wednesday to explain why the bank should be allowed to keep doing business in New York, a global hub for the processing of dollars. The hearing remained on the calendar as of Friday afternoon.

The bank had been cooperating in a long probe that dates to 2010 and subsequent settlement talks with federal and local regulators. Those talks continue. The U.S. Justice Department, Federal Reserve Bank of New York and Manhattan District Attorney's office had been engaged in those talks.

The discussions with Lawsky's office are taking place separately, the people familiar with the situation said. Standard Chartered is engaging in those discussions even though the bank strongly disagrees with the regulator's findings, they said.

(Reporting by Carrick Mollenkamp)

• A Permanent Economic Emergency