Standard Chartered's share price hammered

Close to US$20 billion (Dh73.45bn) was at one point wiped off Standard Chartered's market value yesterday after US regulators alleged the bank had wrongfully profited from hundreds of billions of dollars of transactions involving Iran.

The disastrous day marked one of the worst trading sessions for the British banking group in the past quarter century.

On Monday night in the United States, the New York state department of financial services accused the bank of hiding 60,000 secret transactions, said to be worth at least $250bn over the past decade, resulting in "hundreds of millions of dollars in fees".

The bank's London-listed shares eventually fell 16.3 per cent yesterday to close at 1,229 pence , having dropped as much as 30.3 per cent since Monday night. At the shares' lowest point, the $19.5bn resultant loss in market value was equivalent to the GDP of Estonia or Bolivia.

"Motivated by greed, [Standard Chartered] acted for at least 10 years without any regard for the legal, reputational and national security consequences of its flagrantly deceptive actions," the New York regulator said in its report. About half of the alleged suspicious transactions were routed through Standard Chartered's Dubai office, it adds.

If correct, the sums dwarf suspicious trades with Iran made at HSBC, which concealed $19.4bn of Iranian transactions revealed in a critical report by the US Senate last month.

Standard Chartered, headquartered in London and the second-biggest international lender in the UAE, yesterday disputed the regulator's findings.

"The group strongly rejects the position or the portrayal of facts as set out in the order issued by the DFS [department for financial services]," the bank said.

Standard Chartered said 99.9 per cent of deals related to Iran were compliant with regulations, having identified $14 million worth of transactions that did not comply in an internal investigation.

The bank's ratings were cut by four banks and brokerages over fears of the possible loss of Standard Chartered's US banking licence - which would effectively hamper its ability to deal with transactions denominated in dollars.

The situation "presents high risks" to Standard Chartered, analysts said, because the New York body making the allegations has the power to remove its New York banking licence.

"A revocation of the NY licence would have implications for all Standard Chartered's business, as clients would have to use other banks for transactions involving New York, hence this would impact profitability and ability to do business in all geographies," analysts from Mitsubishi UFJ Securities International wrote in a research report.

However, the report added that a fine of about $1bn to 1.5bn was more probable than a revocation of Standard Chartered's licence.

The allegations come a month after HSBC was censured by the US senate for a decade of lax anti-money laundering controls. HSBC admitted its mistakes and apologised.

Standard Chartered will be called before the superintendent of financial services next Wednesday to explain the "apparent violations of law and to demonstrate why [its] licence to operate in the state of New York should not be revoked".

A spokesman for the UK financial services authority (FSA), which regulates Standard Chartered, declined to comment on the latest allegations but said it was in "close contact with Standard Chartered and our counterparts in the US where this case has been brought".

ghunter@thenational.ae