It’s definitely not the best time for British banks. The last one under the spotlight is Standard and Chartered, until now regarded as a darling of the financial sector. The emerging markets-focused lender which managed to escape the effects of Europe’s debt crisis may now lose its operating licence in New York: US regulators alleged it hid $250 billion in transactions with Iran over nearly a decade.
According to the New York State Department of Financial Services, Standard Chartered would have hidden 60,000 secret transactions with Iranian financial institutions that were subject to US economic sanctions from 2001 to 2010 and pocketing millions of dollars in fees. How? Allegedly forging payment directions by stripping the message of unwanted data that showed the clients were Iranian, replacing it with false entries.
The bank claims that the regulator is not presenting the whole picture of the facts but it got the markets punishment anyway. Its London shares fell 16.7%. If the accusations are probed true, the firm may have to pay around $5.5 billion in costs and will face a huge, devastating credibility issue.
The summer’s been rich on nasty news about the financial sector. We had the Libor scandal. And only weeks ago US Senate report accused HSBC of concealing more than $16 billion in sensitive transactions with Iran and Mexican drug lords. As experts explained to AFP, Standard should be worried: even if US authorities are focusing their attention on monetary fines for the British bank, there is a risk of revoking its NY license, something
“any global bank would want to keep no matter how much of their business is generated outside the world’s biggest economy.”