StanChart Investors Not Buying Company’s Defence
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Investors at Standard Chartered Bank are reportedly unconvinced by the company’s attempts to defend itself from allegations that it assisted Iran with over $250 billion in financial transactions, said Reuters on Thursday, with many investors now blaming StanChart’s lack of direct communication with shareholders for limiting its share price recovery.
Investors at Standard Chartered Bank are reportedly unconvinced by the company’s attempts to defend itself from allegations that it assisted Iran with over $250 billion in financial transactions, said Reuters on Thursday, with many investors now blaming StanChart’s lack of direct communication with shareholders for limiting its share price recovery.
On Monday, the New York State Department of Financial Services (DFS) had accused the British bank of hiding $250 billion in financial transactions to Iran, which were in clear violation of U.S. law; though the bank has since come out to “strongly reject” the claim and said that just $14 million of deals flouted the U.S. rules.
Separately, some politicians and financial analysts in the U.K. have also come out to suggest that the allegations against StanChart may be a “conspiracy,” “to win a commercial battle to have trading from London shifted to New York;” and said that case may be due in part to “anti-British bias” from the American side.
Related: Standard Chartered Accused Of Hiding $250 Billion In Iranian Transactions
Related: Standard Chartered Bank Investigation Part of a Larger Political Conspiracy?
A top ten investor however told Reuters that the company had yet to contact him, or other investors, to fully explain the situation, and questioned whether possible lawsuits, fines and the loss of top executives, would dampen StanChart’s share price.
“They haven’t been in touch with us, which surprises me, because when they had rights issue one, two and three, they were in touch well in advance, but this time, not a tweet,” said the investor, who spoke on condition of anonymity.
[quote]”Even if it is only $14 million, they have still committed a crime, and they are still guilty… and if this is hot air and they are just bluffing, then they are playing a very dangerous game,” he added.[/quote]Tom Hibbert, head of the banking litigation group at City of London law firm RPC, suggested that the bank should take whatever punishment it received, without much resistance, in order to avoid further damage to its reputation.
“It’s very difficult to say whether Standard Chartered believe they have a case without knowing all the details … but I think history tells us that it is extremely tough to take on the U.S. regulators and win,” Hibbert said
“It does business with American banks and used to describe itself as a bankers’ bank, organizing trade finance for Asia, so it will not be good for its global reputation to be seen to be falling out with New York regulators,” added Simon Willis, an analyst at Daniel Stewart Securities Plc in London, who still rated the bank as a buy, to Bloomberg.
Since the scandal erupted on Monday, StanChart share price have slumped by 22 percent in London, erasing 8 billion pounds ($12.5 billion) of its market value.
Hugh Young, managing director of top-five StanChart shareholder Aberdeen Asset Management Asia, told Reuters that he was still going to give the bank the benefit of the doubt for now, but he recognised the concern surrounding his company’s investment at the moment.
[quote]”It’s something to worry about, although I noticed a lot of emotive and sensational language which slightly diminishes the allegation … The StanChart we recognize is not the rogue bank portrayed in the allegation,” Young said.[/quote]Related: Post-Libor – Why Bankers Now Face A Legitimacy Crisis: Simon Johnson
Related: UK’s Alarming Apathy Towards Its Banking Sector’s Criminality
On Thursday, South Korea’s financial regulator, the Financial Supervisory Service (FSS), announced that it would also carry out spot checks this month on the local operations of Standard Chartered after the allegations in the States.
“The inspection will focus on whether these banks have reported (to regulators) any dubious transactions including those with countries subject to financial transaction sanctions and whether they took their responsibility of checking customers (identification),” the FSS statement said.
