UK BANK Standard Chartered won some help from the Bank of England’s governor yesterday in its fightback against a US regulator’s allegations that it hid $250 billion (€202 billion) of sanctions-busting transactions with Iran.
The bank lost over a quarter of its market value in 24 hours after the New York state department of financial services threatened on Monday to cancel its state banking licence and called it a “rogue institution” for breaking US sanctions against Iran.
Standard Chartered shares bounced 7.1 per cent yesterday to close in London at £13.15, up from a three-year low of £10.92 earlier in the week. They were still down 18 per cent since the regulator’s threat, which chief executive Peter Sands said was “disproportionate” and came as a “complete surprise”.
The bank’s top executives, some, like Sands, after scrambling back from summer holidays, worked on its defence strategy, having so far contested the regulator’s figures and its interpretation of the law, but given little detail.
They say only a tiny proportion of the Iran-related deals – less than $14 million – were questionable under US sanctions rules.
Bank of England governor Mervyn King drew unfavourable comparisons between the handling of this case and other US actions against British banks, such as the interest rate-manipulating investigation into Barclays.
In the Barclays case, he said, all regulators in Britain and the US produced coordinated reports after the investigation was complete. But in Standard Chartered’s case, “one regulator, but not the others, has gone public while the investigation is still going on”.
Sources familiar with the matter said that the New York regulator, Benjamin Lawsky, had angered officials in Washington at the US treasury department and Federal Reserve by going it alone.
“I think all the UK authorities would ask is that the various regulatory bodies that are investigating the particular case try to work together and refrain from making too many public statements until the investigation is completed,” King said.
Mr Sands, in his first public comments since the crisis arose, said the regulator had given his bank no prior notice. But he offered no major new information on the allegations, which the bank has been reviewing for the past two years.
“(We) fundamentally reject the overall picture and believe there are no grounds for them to take this action and it would be wholly disproportionate,” he told reporters, referring to the threat to cancel the bank’s licence to operate in New York.
Though Standard Chartered’s business is concentrated in emerging markets, its operation in New York is important to its ability to offer dealings around the world in US dollars. – (Reuters)
