This writer was hoping a week on the jellyfish-laden beaches of Spain would be spared another financial scandal. Too bad banking is the gift that keeps on giving! As Knight rescues itself from algorithm darkness in New York the latest tale of no-trust originates from London. The high flying emerging markets player Standard Chartered Bank has been rocked by explosive allegations in a report from US regulators. The Telegraph outlines the case here…
Standard Chartered has rejected US claims that it “schemed” with Iran to conduct secret transactions worth $250bn (£160bn), insisting that “99.9pc of the transactions” complied with regulations……….
In a devastating 27-page order Benjamin Lawsky, superintendent of the New York State Department of Financial Services, claims that Standard Chartered Bank (SCB) “operated as a rogue institution” – and that the bank’s group directors in London were complicit.
The watchdog has called on the lender to explain the apparent violations and demonstrate why it should not be banned from Wall Street.
WealthiFi would be 99% certain this is not going to end well for Standard Chartered. $250 billion of transactions…whoah! The fines will likely be in billions and please recall our “Most dividends in very small basket” article. Standard Chartered was the 10th biggest dividend payer in the UK in the past 12 months per Capita Registrars. Your advisor will no doubt be on to reassure and suggest holding ‘for the long run’ despite the 20% pummeling taken by the share today – note lots more boxing analogies in next few days! It could be a very long run….WealthiFi is unsure how US shareholders will react, particularly when you read this delightful account of a 2006 exchange between nervous US employees and their London based bosses…
In October 2006, the head of the bank’s American operations “sent a panicked message to the group executive director in London” saying that the bank’s handling of Iranian clients could cause “catastrophic reputational damage”. The unnamed director 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.”
Could be the quote of 2012! Meanwhile, WealthiFi is not sure how a financial services franchise in Asia or anywhere is going to be able to compete without a f******* American banking licence.
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