Aug 7 2012
More than £6 billion has been wiped from the value of Standard Chartered after the banking giant was accused of hiding 250 billion US dollars (£160 billion) of transactions with the Iranian government.
In the latest blow to the reputation of a UK-based bank, regulators in New York said Standard was a "rogue institution" which broke sanctions imposed on Iran, exposing the US to terrorists, drug kingpins and weapon dealers.
Standard, one of the top five largest banks in the UK by market value, said it "strongly rejects the position or the portrayal of facts" set out in the order by the New York state's Department of Financial Services. However, its shares slumped by 18% on top of the 6% decline after the accusations were made just before the close of the London market on Monday.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "There is some irony that, a few days after describing its approach as 'boring' at its interim results, Standard Chartered should become embroiled in yet another potential banking scandal. The allegations serve to add more risk to an already beleaguered sector."
The investigation's findings come after fellow British bank HSBC was accused of allowing drug cartels and rogue states to launder billions of pounds through its US arm.
The bank, which employs nearly 90,000 people worldwide and is primarily focused on Asian markets, has been called to appear before regulators on Monday to explain the apparent violations and defend its licence to trade on the New York Stock Exchange.
In its findings report, the regulator said: "In short, SCB (Standard Chartered Bank) operated as a rogue institution."
The regulator claims that between January 2001 and 2010, Standard Chartered conspired with Iranian clients to route payments through New York after first stripping information from wire transfer messages used to identify sanctioned countries.
The bank moved the transactions through its New York branch on behalf of Iranian financial institutions that were subject to US economic sanctions, and then covered up the dealings, the banking regulator claimed. The institutions included the Central Bank of Iran, as well as Bank Saderat and Bank Melli, both of which are also Iranian state-owned institutions.
A statement from Standard Chartered said: "As reported previously, the group is conducting a review of its historical US sanctions compliance and is discussing that review with US enforcement agencies and regulators. The group cannot predict when this review and these discussions will be completed or what the outcome will be."