Find 'backbone' to punish Standard Chartered, US senator tells regulatorAnnemarie McAvoy in The Guardian, August 15, 2012
A leading US senator has asked other regulators to find the "backbone" to take action against Standard Chartered following the London-based bank's $340m (£220m) settlement in New York over sanctions breaches with Iran.
Carl Levin said on Wednesday 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's share price 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 US justice department and the US treasury, which are both investigating sanctions breaches that allegedly took place between 2001 and 2007. Settlements could come as soon as next week.
Annemarie McAvoy, a former federal prosecutor who is now a professor at Fordham Law School in New York, said the pressure was on after the DFS moved alone to level charges. "Given that New York extracted $340m, the other regulators will undoubtedly have to come up with similar resolutions," she said.
Even though the bank's shares rose 4% to £14.26, chief executive Peter Sands remains under pressure, as they have slumped from £16 since the DFS made 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, that 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 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.
"New York's regulatory action sends a strong message that the United States will not tolerate foreign banks giving rogue nations like Iran hidden access to the US financial system."