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The New York State Department of Financial Services (DFS) said on Monday that Standard Chartered “schemed” with the Iranian government and hid from law enforcement officials some 60,000 secret transactions to generate hundreds of millions of dollars in fees over nearly 10 years.
The British bank, which the regulator called a “rogue institution” also exposed the US banking system to terrorists, drug traffickers and corrupt states, the DFS said.
London-based Standard Chartered was surprised by the statement, even though it has been in talks with US regulators over the matter for years. Its shares were 18.4 percent lower at 12.00 pounds by 0820 GMT on Tuesday.
The shares had already fallen 6.2 percent on Monday, sliding on the close just as the news emerged.
The regulator’s move is a savage blow to Standard Chartered, which has been one of the banks least tarnished during the financial crisis thanks to its focus on Asia and other emerging markets and a conservative capital and liquidity approach.
A top 40 investor in the British bank said he did not expect it to be a lasting problem given the bank’s robust defence, but added: “Given that the shares are not especially cheap, particularly in relative terms, it may be the shares remain in the doldrums for a while now that their blameless reputation has suffered a knock.”
Standard Chartered said the bank “does not believe the order issued by the DFS presents a full and accurate picture of the facts.”
The loss of a New York banking license would be a devastating blow for a foreign bank, effectively cutting off direct access to the US bank market. Standard Chartered processes $190 billion every day for global clients, the New York bank regulator said.
In an unusual look inside a bank, the New York regulator described how Standard Chartered officials debated whether to continue Iranian dealings.
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