Find 'Backbone' to Punish Standard Chartered, US Senator Tells Regulators

Here he goes again.

A leading US senator asked regulators to find the 'backbone' to take action against Standard Chartered on Wednesday following the London-based bank's $340m (£220m) settlement over sanctions breaches with Iran.

Carl Levin said that the steps taken by the New York Department of Financial Services (DFS) that forced Standard Chartered to agree to the civil penalty showed that it was not necessary to go through years of negotiation.

'The agency also showed that holding a bank accountable for past misconduct doesn't need to take years of negotiation over the size of the penalty; it simply requires a regulator with backbone to act', said Levin, who last month accused HSBC of a "pervasively polluted" culture in laundering money for drug cartels and terrorists in a gruelling public hearing.

Standard Chartered share prices rose on the FTSE 100 on Wednesday even as the bank attempted to broker a settlement with other regulators. It could face further fines from the justice department and the US Treasury, which are also investigating the sanctions breaches which allegedly took place between 2001 and 2007. Settlements could come as soon as next week.

Annemarie McAvoy, a former US federal prosecutor who is now law professor at Fordham Law School in New York, said pressure was on after the DFS moved alone in levelling its charges against Standard Chartered.

'Given that New York extracted $340m, the other regulators will undoubtedly have to come up with similar resolutions', she said.

Even though its shares rose 4% to £14.26, the bank's chief executive Peter Sands remained under pressure as they have slumped from £16 since the DFS levelled the damning charges last Monday. He is believed to have resumed the family holiday he broke off to tackle the DFS claims.

Benjamin Lawsky, head of the DFS, claimed that Standard Chartered schemed to hide 60,000 transactions valued at about $250bn which breached sanctions with Iran. Sands admitted to only 300 breaches, with a value of about $14m.

Anthony Sabino, a law professor at St John's University in New York, said Standard Chartered was 'far from out of the woods'. But he expected Federal investigations of the bank to continue in a more low key manner. 'Without a doubt the justice department and treasury will want to deal with this quickly. But I suspect they will want it done in a quieter manner', he said. He said Lawsky had acted 'like the Lone Ranger'.

Analysts at UBS predicted the shares would rise: 'The aggregate of this fine, plus any additional recompense to other regulators, could total less than 1% of Standard Chartered's equity and the DFS fine represents around 6% of our current earnings forecast for Standard Chartered, suggesting the company will be able to absorb this cost and still deliver a 10th successive year of record profits'.

Powered by article was written by Dominic Rushe in New York and Jill Treanor, for The Guardian on Wednesday 15th August 2012 18.58 Europe/London © Guardian News and Media Limited 2010


image: © Lisamarie Babik

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