Belfast Telegraph

Chartered's shares dive after laundering claims

By Oliver Wright and Ben Chu

The market value of the UK's second largest bank has fallen by almost a quarter after it was accused by US regulators of laundering $250bn (£160bn) from Iran and behaving like a "rogue institution".

In the latest blow to the reputation of the City of London, Standard Chartered was accused by regulators in New York of leaving the US financial system "vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes" through its "flagrantly deceptive actions" between 2001 and 2010.

The bank, second only to HSBC in market capitalisation and with extensive operations across the globe, lost 23% of its value in trading yesterday morning. This was on top of a fall of 6% in the final minutes of trading on Monday when the news broke.

The bank has been called to appear before regulators on Monday to explain the apparent violations and defend its licence to trade in New York.

The revelations are all the more embarrassing because Standard Chartered largely escaped unscathed from the financial crisis and its senior executives in London have close links to senior politicians in both countries.

Its chief executive Peter Sands has been one of the most vocal opponents of new regulations that have been advanced to curb the excesses of the financial sector.

He has even been promoted in some quarters as a possible replacement for Sir Mervyn King as Governor of the Bank of England.

In an explosive legal order released yesterday, New York State's Department of Financial Services accused the New York branch of the 160-year-old institution of earning millions of dollars in fees by "conspiring" with Iran in around 60,000 "secret transactions".

This behaviour, according to the regulator, had been purely "motivated by greed" on the part of Standard Chartered.

The regulator also said it had uncovered evidence of similar schemes by Standard Chartered to conduct business with Libya, Burma and Sudan, all of whom are subject to sanctions by the US.

The findings include a memo sent in October 2006 from the bank's US chief executive to the group executive director in London raising concerns about the activities with Iran.

The group executive director in London allegedly replied: "You f****** Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."

The bank has been threatened with having its US banking licence revoked and has been ordered to appear before the regulator soon to explain these apparent violations.

In July, a US Senate panel found that HSBC was used by Iranians looking to evade sanctions and by Mexican drug cartels.

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