Standard Chartered Bank shares dive on Iran allegations

Standard Chartered Plc shares dropped sharply on Tuesday as investors reacted to US charges that the bank was involved in laundering money for Iran.

The charges against Standard Chartered were a shock for a bank which proudly described itself recently as "boring".

Shares were down nearly 20 per cent at 1,187 pence at one point in early trading Tuesday on the London Stock Exchange. In Hong Kong, they were down 16.6 per cent near the end of the session.

New York State Department of Financial Services alleged on Monday that Standard Chartered schemed with the Iranian government to launder $250 billion from 2001 to 2007, leaving the United States' financial system "vulnerable to terrorists."

Standard Chartered said it "strongly rejects" the allegations. In a statement, the bank said "well over 99.9 per cent" of the questioned transactions with Iran complied with all regulations, and the exceptions amounted to $14 million.

The New York regulator ordered Standard Chartered representatives to appear in New York City on August 15 "to explain these apparent violations of law" and to demonstrate why its license to operate in the State of New York "should not be revoked."

Gary Greenwood, analyst at Shore Capital in London, said the possible revocation of the New York license was of far greater concern than any potential fine, which could run into hundreds of millions of dollars.

Standard Chartered's US operation facilitates trade for customers that have operations in both the United States and emerging markets.

The New York agency alleged that Standard Chartered conspired with Iranian clients to route nearly 60,000 different US dollar payments through Standard Chartered's New York branch "after first stripping information from wire transfer messages used to identify sanctioned countries, individuals and entities."

Last week, Standard Chartered' chief executive, Peter Sands, boasted that the bank has racked up a 10-year string of record first-half profits "amidst all the turbulence in the global economy and the apparently never-ending turmoil in the world of banking."

"It may seem boring in contrast to what is going on elsewhere, but we see some virtue in being boring," Sands had said.