Stan Chart bites back against Iran charges
Post date: Aug 09, 2012 7:50:13 PM
After the explosive charges made against Standard Chartered by New York State's Department of Financial Services, the British bank is fighting back and even threatening to launch a countersuit against the regulator. Joanna Partridge reports
UK-STANCHART FIGHTBACK - Its reputation battered and a quarter of its market value lost Standard Chartered is fighting back
New York State's Department of Financial Services says the British bank helped Iran with $250 billion of money-laundering transactions.
The bank won some help on Wednesday from the Governor of the Bank of England, Mervyn King.
And the lender's Chief Executive Peter Sands has now made his first public comments since the crisis erupted.
He said the ' threat to cancel the bank's New York licence was "wholly disproportionate".
And added we "fundamentally reject the overall picture and believe there are no grounds for them to take this action".
Chris Wheeler from Mediobanca says the two sides even contest the size of the transactions with Iran.
Chris Wheeler, Analyst, Mediobanca, saying
"I think the likelihood of an early settlement is now quite slim because we have these two very entrenched positions. I mean $250 billion playing $14 million, there's a massive gap there."
The disagreement between the two sides puts paid to some analysts' predictions that Stan Chart would just pay a fine to put an end to the affair.
PTC:
The charges made against Standard Chartered by the DFS certainly were explosive, accusing the lender of being a "rogue institution" and "scheming" with Iran. Now the bank's hitting back, saying its own legal team may launch a countersuit against the regulator.
That news has surprised analysts.
Chris Wheeler, Analyst, Mediobanca, saying
"There's no real precedent of a lender trying to sue a regulator, we can understand why they've sort of got this into the press, and I do think it's probably sabre-rattling more than anything else, because I'm sure shareholders have said to them you can't allow this kind of thing to happen."
Many are asking about the political implications of the story - with a U.S regulator making accusations about a British bank.
And some, including Mervyn King, have criticised the DFS for seemingly marching out of step with federal regulators.
Unlike many banks in the world, Standard Chartered is still making money in developed markets.
Its share price has rebounded a little - but investors will remain concerned, as the Iran allegations are expected to run and run.
Joanna Partridge, Reuters