The bank’s chief may keep his job thanks to investors’ goodwill, but can forget aspirations to head Bank of England
It is just a week since the CEO of Standard Chartered, Peter Sands, insisted that Benjamin Lawsky, of the New York Department of Financial Services, was talking utter rubbish. The bank, said Sands, had not concealed $250bn (£160bn) of US sanction-busting transactions with the Iranian government.
He came out fighting and branded the allegations as “incorrect as a matter of law”. He claimed 99.9% of the transactions were clean, although he did fess up to $14m of accidental dealings.
So the obvious question is, why agree to pay a fine of $340m? That would have covered a lot of lawyers’ fees to allow Sands to prove his point.
Instead, as part of the settlement, Standard Chartered agreed with Lawsky that business worth “at least $250bn” was at issue.
There are analysts, and investors, who will say the agreed settlement is a good result, allowing this little local difficulty to be swept away and the bank to move on with its vital New York banking licence intact. There were suggestions the fine could be north of $500m. Dutch bank ING paid $600m to settle similar allegations.
But several things are not intact, notably the reputations of Sands and finance director Richard Meddings (who, Lawsky’s report suggested, had taken issue with “fucking Americans” telling the bank who they could and could not do business with). Sands might just hold on to his job, such is the store of goodwill he has built up among investors, but he can forget any aspirations to be the next governor of the Bank of England.
Meddings, tipped as a potential head of Barclays, can similarly forget any career enhancing moves.
The already near-shredded status of British banks has also taken another hammer blow. After Barclays’ Libor rigging and HSBC’s Mexican money laundering scandal, we now have Standard Chartered branded as a facilitator for “terrorists, weapons dealers, drug kingpins and corrupt regimes”. Can it really get much worse for the banking sector?
Worryingly, the $340m agreed on Tuesday is a settlement with just one regulator. Sands admits four others are also looking at the same claims. Might there be more “settlements” to come?
Those analysts and shareholders who think Sands still worth backing really need to find some moral fibre.