A leading stockbroker tells Channel 4 News Standard Chartered’s share price “could take years to recover” from claims the bank helped launder money for the Iranian government.
The 160-year-old bank saw shares plunge 24 per cent, wiping £10bn from its value, after regulators claimed its underhand tactics exposed the US to terrorists and drug kingpins and helped develop its nuclear programme.
The bank, which employs 2,100 staff in the UK, said it “strongly rejects” the portrayal by the New York State Department of Financial Services.
Standard, which will face the wrath of US regulators at a hearing on Monday, said the claims were inaccurate and 99.9 per cent of its dealings with Tehran complied with regulation.
Richard Hunter, of stockbroker Hargreaves Lansdown said: “There is some irony that a few days after describing its approach as ‘boring’ at its interims, Standard Chartered should become embroiled in yet another potential banking scandal.
“The problem with this, as with BP, is that the bank could be cleared of wrong-doing, but that will not help the share price.
“It fell 24 per cent at one point on Tuesday and that could take years to recover to what it was before the allegations were made.”
The New York regulator said its investigation involved the review of more than 30,000 pages of documents, including internal emails describing “wilful” violations of the law.
It claims the UK bank plotted with the government of Iran to hide roughly 60,000 transactions over a decade, reaping the bank hundreds of millions of dollars in fees.
The watchdog said Standard’s London office tampered with wire payment messages sent to New York to remove reference to Iranian clients, mainly state-owned banks, in a practice known as “wire-stripping”.
In a devastating conclusion to its report, the New York authority wrote that Standard Chartered was “motivated by greed” and had acted “without any regard for legal, reputational, and national security consequences”.
In 2006, an employee in the New York branch complained to superiors that the bank’s Iran dealings might make it criminally liable.
The report even cited a response from a senior London-based Standard Chartered executive to a New York official saying: ‘You f****** Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”
The New York regulator threatened to revoke Standard’s US banking licence and demanded it hire an independent monitor.
The case has echoes of the HSBC report issued by the same regulator last month, in which it was accused of helping Mexico drug cartels launder millions of dollars of illegal proceeds.
The regulator has not elaborated on its claims any money allegedly laundered through the bank was used for nuclear weapons.
David Hampshire is a banking analyst specialising in the retail sector. He said: “I don’t know how you can point the finger at a bank for knowingly laundering money for nuclear warheads.
“Iran has vast reserves of oil which it trades all over the world, so it is feasible this could have paid for any nuclear ambitions.
“Banks do have a conscience even in these financially-troubled times.”
David Green, former head of international policy for the Financial Services Authority, said the bank was not “evil” but was no angel either.
“My gut reaction is they fall in the middle here. No bank of the international standing of Standard Chartered would want to get into trouble,” he said.
“They seem to have carried out a lot of due diligence on thousands of transactions. Would they knowingly help fund nuclear weapons?”
Standard Chartered issued a statement denying the claims: “The group strongly rejects the position or the portrayal of facts as set out in the order issued by the [New York State] Department of Financial Services.”
Standard added: “The group does not believe the order issued by the DFS presents a full and accurate picture of the facts. The analysis, that the group shared with all the US agencies, demonstrates that throughout the period the group acted to comply, and overwhelmingly did comply, with US sanctions.”