LONDON (AP) — Standard Chartered PLC saw 5.8 billion pounds ($9.1 billion) wiped off its market value Tuesday after the New York state regulator accused the U.K. bank of being involved in laundering money for Iran, dealing a further blow to the City of London's reputation as a financial center.
The charges against Standard Chartered were a shock for a bank which proudly described itself recently as "boring" — its share price was down as much as 25 percent before recovering a bit to close 16.5 percent lower at 12.28 pounds on the London Stock Exchange.
The falling share price also affected the main FTSE 100 index in London — Standard Chartered makes up 1.5 percent of the index's overall market value. In Hong Kong, where the bank's shares are also listed, they finished 14.9 percent lower.
The storm surrounding Standard Chartered is the latest in a summer of scandals for the City of London — one of the world's leading financial centers. Bob Diamond, the chief executive of Barclays, was forced to step down after his bank was found to have manipulated a key interbank interest rate. HSBC has been fined for failing to stop money-laundering in Mexico and U.S. bank JPMorgan suffered a huge trading loss in its London office.
New York State Department of Financial Services alleged on Monday that Standard Chartered schemed with the Iranian government to launder $250 billion from 2001 to 2007, leaving the U.S. financial system "vulnerable to terrorists."
Standard Chartered said it "strongly rejects" the allegations. In a statement, the bank said "well over 99.9 percent" of the questioned transactions with Iran complied with all regulations, and the exceptions amounted to $14 million.
Last week, Standard Chartered's chief executive, Peter Sands, boasted that the bank has racked up a 10-year string of record first-half profits "amidst all the turbulence in the global economy and the apparently never-ending turmoil in the world of banking."
"It may seem boring in contrast to what is going on elsewhere, but we see some virtue in being boring," Sands added.
Though based in London, Standard Chartered relies heavily on China and other emerging Asian markets, where it also has retail banking operations.
The New York regulator ordered Standard Chartered representatives to appear in New York City on Aug. 15 "to explain these apparent violations of law" and to demonstrate why its license to operate in the State of New York "should not be revoked."
Gary Greenwood, analyst at Shore Capital in London, said the possible revocation of the New York license was of far greater concern than any potential fine, which could run into hundreds of millions of dollars.
Standard Chartered's U.S. operation facilitates trade for customers that have operations in both the U.S. and emerging markets. Continued...