FILE PHOTO: U.S. President Donald Trump and Turkey's President Recep Tayyip Erdogan meet at the White House in Washington, D.C., U.S., September 25, 2025. REUTERS/Kevin Lamarque/File Photo

By Humeyra Pamuk and Jonathan Spicer

WASHINGTON/ISTANBUL (Reuters) -Turkish officials proposed settling a U.S. legal case against state lender Halkbank for some $100 million during a meeting between President Donald Trump and Turkish President Tayyip Erdogan at the White House last month, two sources told Reuters.

Under the proposal that was discussed, which included additional conditions, the bank would not admit guilt in the case - a key priority for Ankara - the sources familiar with the conversations said.

Halkbank is facing fraud, money laundering and conspiracy charges in the United States for allegedly helping Iran evade U.S. economic sanctions related to its nuclear program. The bank has pleaded not guilty.

Erdogan's office declined to comment on any settlement talks, when contacted by Reuters. The White House did not respond to a request for comment. Halkbank, Turkey's fourth-largest lender by assets, did not immediately comment.

U.S.-TURKEY RELATIONS WARMING AFTER YEARS OF STRAIN

Any settlement could bolster Ankara's efforts to mend its relationship with Washington, which was undermined by Turkey's decision to purchase S-400 missile systems from Russia in 2019 during Trump's first term.

The U.S. cancelled a planned sale of F-35 fighter jets to Turkey in response and ousted it from a joint production programme for the planes. It also imposed sanctions on Turkey's top defense procurement body. The case against Halkbank was brought later that year.

Bilateral relations between the two NATO allies are now warming due in part to the two leaders' friendly personal ties, though the state visit failed to secure Trump's prompt blessing to overcome U.S. sanctions and buy F-35s, as Turkey had hoped.

Reuters was unable to determine what specific conditions were discussed as part of last month's White House talks over a possible Halkbank settlement.

It was not clear how the U.S. side reacted to the Turkish proposal or whether discussions continued after the meeting, which took place between Trump, Erdogan and their top secretaries and ministers.

ERDOGAN SOUGHT TO DISCUSS BANK WITH TRUMP

The U.S. Supreme Court declined to hear Halkbank's latest appeal on Monday, upholding a lower court's ruling that the U.S. government's criminal case should proceed.

The decision sent Halkbank shares down 10% and, barring a settlement, clears the way for a possible trial, though the bank said efforts were under way to reach a solution.

"Initiatives to find a legal ground of conciliation within the framework of the understandings between the United States and Turkey are also ongoing in a positive direction," the bank said following the ruling.

Erdogan, seated next to Trump after arriving at his first White House reception in six years, told reporters that they would discuss Halkbank among other matters. He has previously called the charges "unlawful" and "ugly".

Gonul Tol, director of the Washington-based Middle East Institute's Turkish program, had flagged the potential $100 million fine on X shortly after the White House meeting, calling it a possible "concrete step" in otherwise mixed talks.

The Supreme Court decision "does not mean an agreement cannot be reached between Ankara and Washington," she wrote on X on Monday. "The courts can grant the administration the right to decide on cases that concern foreign policy like this."

ALLEGATIONS BANK EVADED U.S. SANCTIONS ON IRAN

Prosecutors with the Manhattan U.S. Attorney's office have accused Halkbank of using money servicers and front companies in Iran, Turkey and the United Arab Emirates to help Iran evade U.S. sanctions.

According to prosecutors, Halkbank secretly transferred $20 billion in restricted funds, converted oil revenues into gold and cash to benefit Iranian interests and documented fake food shipments to justify transfers of oil proceeds.

In its appeal to the Supreme Court, Halkbank had argued that, as a Turkish state-owned entity, it should be immune from legal actions in another country's courts.

Some analysts have speculated that any settlement could be higher than the $100 million that the sources said had been floated at the White House.

Between 2009 and 2015, eight European banks – including HSBC, BNP Paribas, Standard Chartered, and Credit Suisse – were penalized over $14 billion for, among other offenses, violating various U.S. sanctions programs.

France's BNP Paribas alone agreed to pay almost $9 billion to resolve accusations that it violated U.S. sanctions against Sudan, Cuba and Iran. The bank had pleaded guilty.

(Reporting by Jonathan Spicer in Istanbul and Humeyra Pamuk in Washington; Additional reporting by Luc Cohen and Steve Holland; Editing by Joe Bavier)