‘Smug’ Standard Chartered given hammering after Iran allegations
SOME £8 billion has been wiped from the value of Standard Chartered since it was accused of being a “rogue institution” by US regulators in the latest debacle to hit Britain’s banking sector.
The New York State Department of Financial Services (DFS) has threatened to revoke the bank’s licence to operate in the state because of accusations it illegally “schemed” with Iran to launder money.
UK analysts, who had believed Standard Chartered would be unscathed by recent banking scandals, yesterday estimated the exposure could cost it up to $5.5 billion (£3.5bn).
The DFS issued an order on Monday night alleging the bank – which recently claimed pride in being “boring” in comparison to its scandal-rocked counterparts – conducted $250bn of deals with Iranian banks over seven years and earned hundreds of millions of dollars in fees for handling transactions for institutions subject to US economic sanctions.
Standard Chartered said it “strongly rejects” the allegations. In a statement, the bank said “well over 99.9 per cent” of the questioned transactions with Iran complied with all regulations, and the exceptions amounted to just $14 million.
However, Nic Clarke, of brokerage Charles Stanley, said there was a “complete disconnect” between the DFS accusations and the bank’s rebuttal, adding that Standard Chartered would need to “put up a much stronger
Last week, the bank’s chief executive, Peter Sands, boasted that the bank had racked up a ten-year string of record first-half profits, adding that: “It may seem boring in contrast to what is going on elsewhere, but we see some virtue in being boring”.
Sandy Chen, an analyst with Cenkos, said the bank’s “smug” results presentation last week was the factor that “rankles most”.
He noted that the DFS’s “evidence of a long-standing pattern of senior management deceit” only got a “cursory
paragraph” in the bank’s first-half results.
“‘Mr Market’ won’t forgive this breach of its trust for many years, we expect,” added Chen.
The New York regulator has ordered Standard Chartered representatives to appear in New York a week today “to explain these apparent violations of law” and to demonstrate why its licence to operate in the state “should not be revoked”.
Cormac Leech, an analyst at Liberum Capital, estimated the bank could be fined $1.5bn, lose revenues from Iranian operations of $1bn and face further losses of a $3bn if senior managers quit as a result of the claims. Nevertheless, he rated the shares as a “buy”.
The watchdog alleged that Standard Chartered conspired with Iranian
clients to route nearly 60,000 different US dollar payments through its New York branch “after first stripping information from wire transfer messages used to identify sanctioned countries, individuals and entities”.
The allegation against the group is the latest embarrassment for British banks in recent months, after HSBC was implicated in money laundering for Mexican drug cartels and a host of lenders were accused of manipulating Libor, for which Barclays has already been fined £290m by a different US regulator.
Shares in Standard tumbled 16.4 per cent yesterday to 1,228.5p after a 6.2 per cent fall in the final minutes of trading on Monday.
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Wednesday 19 June 2013
Temperature: 9 C to 18 C
Wind Speed: 16 mph
Wind direction: West
Temperature: 12 C to 20 C
Wind Speed: 8 mph
Wind direction: North east