Chief executive Peter Sands’s defence of bank in light of report by New York regulator sees market confidence rise
It was a better day for the defence. Standard Chartered’s share price rebounded 7%. Sir Mervyn King criticised the New York state department of financial services (DFS) for going solo before an investigation by five agencies has been concluded.
The bank’s chief executive, Peter Sands, sounding variously indignant and bemused, did a good job of presenting his case that Standard Chartered’s indiscretions were tiny – a matter of a few millions of dollars arising from administrative errors.
Ultimately, though, we are no closer to the heart of the matter since the central question is whose interpretation of US laws on “U-turn” transactions is correct.
These laws, remember, involve transactions initiated offshore by non-Iranian foreign banks and only passing through the US on their way to other non-Iranian foreign banks. The New York DFS reckons there were dodgy transactions totalling $250bn; the bank, arguing the department is “incorrect as a matter of law,” says $14m.
So Standard Chartered is either guilty of monstrous deception or is virtually squeaky clean. And the truly baffling part of the tale is how, after two full years of investigation, the two sides could still be arguing about the technical meaning of a law. Shouldn’t that have been sorted out in the first week, or at least the first month?
It’s too late now, but King is right – the DFS should not have broken ranks and gone public before basic legal points have been settled.