Inquiry by US authorities sees Standard Chartered shares slide

Standard Chartered Shanghai Towers at night

Shares in Standard Chartered slid to their lowest level in five-and-a-half years on Thursday after reports that US authorities had reopened an investigation into the bank over breaching sanctions with Iran.

Amid lingering anxiety about the capital position of the emerging markets-focused bank, its shares slumped 5% to 943p – a level last seen in April 2009.

It escalated a fall that began on Tuesday when the London-listed bank’s boss, Peter Sands, admitted it could not achieve its profits promises for the year.

The continued slide in the share price – down more than 30% this year – piles further pressure on Sands as he prepares to meet the bank’s investors in Hong Kong next month, where he is expected to face questions about strategy and the bank’s capital position. The FTSE 100 index is down just over 4% over the same period.

When the bank released its third quarter figures earlier this week, Sands had to concede that the bank would not be able to report higher profits for the second half of the year as he had previously pledged.

Reports that the US regulators, which fined Standard Chartered £415m in 2012 for breaching sanctions with Iran, had reopened their investigation was also said to have sparked fresh anxiety in the markets.

Neither the US department of justice or the New York department of financial services would comment on the reports that they were now looking again at the case.

In August, Standard Chartered had warned it could face fresh fines from US authorities and a possible extension of a two-year deferred prosecution agreement due to expire at the end of the year.

The bank would not comment on the reports or the market reaction but referred back to the last comments in August.

“We do not comment on media or market speculation; however, we direct your attention to the regulatory compliance disclosures in our 2014 half-year report. Improvement of our sanctions and anti-money laundering systems and training is a top priority for the Bank and will remain so,” a spokesman said.

According to reports, the US authorities are looking at whether Standard Chartered hid transactions that were in breach of the sanctions at the time of 2012 settlement. Since then, the bank has had further run-ins with regulators, including being forced to retract comments by chairman Sir Jon Peace in March 2013 after he described the sanctions breaches as “clerical errors”.

The bank also insists it is well capitalised and well within regulatory limits, although one shareholder said: “There is a strong growing belief that it needs more capital.”

Ian Gordon, banks analyst at Investec, said bad debts would need to “explode” before capital became an issue for the bank.

Powered by article was written by Jill Treanor, for The Guardian on Thursday 30th October 2014 19.19 Europe/London © Guardian News and Media Limited 2010


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