Banking Wars – NY Dept. of Financial Services attempts death-blow to London’s Standard Chartered for hiding “Iran transactions”

Watchdog’s Iran ambush leaves StanChart reeling
7 August, 2012 – Reuters – By Lawrence White and Steve Slater

(Reuters) – A New York bank regulator’s broadside against Standard Chartered Plc for allegedly hiding $250 billion in transactions tied to Iran left investors and the bank questioning the motive for the ambush, which wiped $17 billion off its value.

London-based Standard Chartered hit back at the New York State Department of Financial Services (DFS) threat to tear up its state banking license on Tuesday, dismissing the charge that it was a “rogue institution” that “schemed” with the Iranian government as a distortion of the facts.

Bank insiders were as shocked as investors by the ferocity of the DFS accusations over its involvement with Iran, which is subject to U.S. sanctions over its nuclear program.

Chief Executive Peter Sands scrambled back from his vacation as the bank held hastily convened conference calls to plan its defense and try to limit the damage caused to its reputation.

The U.S. agency said Standard Chartered hid 60,000 secret transactions to generate hundreds of millions of dollars in fees over nearly 10 years.

Shares in Standard Chartered closed down 16.4 percent at 12.28 pounds, taking their losses to 24 percent since the news surfaced just before Monday’s close. They had earlier slumped as low as 10.92, their lowest for three years.

“Even the so-called ‘safe’ banks like StanChart and HSBC seem to be crumbling, with their reputation in tatters. No one, it seems, is immune,” said one institutional investor, who asked not to be named.

“Some of the language used is very disturbing. Of course, it could be that the Americans are exaggerating, but somehow that doesn’t seem to be the case here,” the investor said.

A fund manager for a major institutional shareholder in the bank, however, commented that “sensational language” used by the regulator “diminished” its allegations. …more