"(Reuters) - A rogue Standard Chartered Plc banking unit violated U.S. anti-money laundering laws by scheming with Iran to hide more than $250 billion of transactions, and may lose its license to operate in New York State, a state banking regulator said on Monday.
Benjamin Lawsky, superintendent of the state’s department of financial services, said Standard Chartered Bank reaped hundreds of millions of dollars of fees by scheming with Iran’s government despite U.S. economic sanctions to hide roughly 60,000 transactions from 2001 to 2010.
Lawsky’s order quotes a senior Standard Chartered official in London who, upon being advised by a North American colleague that its Iran dealings could cause “catastrophic reputational damage,” reportedly replied:
“You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”
Lawsky said the unit of the London-based bank was “apparently aided” by its consultant Deloitte & Touche LLP, which hid details from regulators, and despite being under supervision by the Federal Reserve Bank of New York and other regulators for other compliance failures…
…Lawsky said he is also investigating “apparently similar” schemes to conduct business with other countries subject to U.S. sanctions, including Libya, Myanmar and Sudan."
Oh yeah, I’m 90% sure they’re gonna freeze US hiring until this solution pays out. Or at the very least if they don’t freeze hiring you’d be setting yourself up for a potential rapid exit. I’d say 50% chance that NY rejects their license and the bank is shut out of US markets and dollar currency. In this event, they’ll slowly bleed away business in Asia as a result of operational limitations until someone either buys them or they just become and also ran. The other 50% chance is a massive 1/2 billion to 1 billion dollar fine (as fees earned from these transactions were several hundred million USD) which would allow them to continue operations but carry immediate impact. I wouldn’t expect judgements to be handed down until early 2013 at the soonest though, given the size and scope of this.
I personally disagree with you (but not strongly), and there’s validity to your position on this one as well.
That being said, if an empoyee chooses to take a global enterprise into an essential market and flagrantly abuse the laws and regulations because they have different political views, then they’re an idiot. They’ll bring down a heap of political and financial hardship on a public firm for which they are not the elected leadership or spokesperson and destroy shareholder value because of irrational actions which you were not authorized by any board to take. To me that’s also bullshit.
You can’t go into China and just say “#\*(%% Chinese” as they were quoted as saying towards the Americans without expecting your company to get severely b*tch slapped. Now due to poor management and inability to recognize the rules and consequences (as well as hubris) the Standard Chartered will be set back majorly at the very least.
Its our markets, our rules. We’re not telling them who to do business with. We’re just saying who they can do business with using our currency and market place.
These large banks (and companies in general) are so tangled in red tape that they don’t freeze anything in time. Most hiring is on a departmental basis and likely removed from the top level decision making until decisive actions have already taken place. I received an offer at Lehman in August of 2008, though luckily I had the foresight to pass on that.
Will be interesting to watch. A half billion or billion dollar fine would certainly send a clear message. That message would be: “Banks, you can destory the American economy on a semi-permanent basis because of your greed, but don’t even think about executing financial transactions with a rogue state.” So basically, do whatever you want with little or no consequences, just don’t do it with people who won’t sell us cheap oil.
Not if you understand how banks work. Not having access to US markets and US currency would absolutely murder their main Asian base. Due to currency controls, only Chinese banks can access Yuan, so all other Chinese banking is pretty much done in USD. Throughout the rest of Asia USD is generally the main currency of transaction as well. Having your range of offerings handicapped due to inability to transact in USD would reduce Standard Charter to a middle man and make them obsolete. Not to mention the inability to issue LOC’s, etc. Losing US market access for them would be the beginning of the end, most likely ending in a buy out.
“Hi, large Asian export based MNC, our name is Standard Chartered and we’d like to fulfill all your banking needs. As long as those needs aren’t in USD.”
They didn’t lose 25% day over day because they’ll be fine.
i think you misunderstood something here…nobody is saying they’re can’t transact in USD…if the US revokes their license in NYC, that does not mean they can’t grab local deposits in asia and exchange that via the capital markets to get USD…they might lose their ability to grab deposits in the US, but that is not a big channel for them…
it will hurt their trade finance business a bit in the short term…
the US does not even represent 5% of their profits …
the stock is down 25% cause some people assume what you assume…please don’t ever use a stock price performance over 1 or 2 days to justify anything…you’re simply doing guesswork
They will not have direct access to USD and US markets. They will be a secondary player using other banks to transact in that currency. This will definitely drive up costs and push down ability to provide offerings such as LOCs in the Asian markets.
I can’t believe I’m even debating this with someone who thinks sentences end with three periods.
I could have used stock price over two days as a great indicator for FB and been perfectly correct on that one, just as I am now.
do some real research and look at their financial statements…obviously you haven’t done that nor do you know anything about the company and their business model…yes this can crimp on their margins though at this point i haven’t been able to figure out to what extent…
they will pay a fine and reconcile with the regulators…they will not see their revenues drop by 25%…
ok black, relax…i don’t own standard charter so it isn’t a big deal for me…i see your point but ithink its the magnitude we’re disagreeing over…lets revisit in 6 months time…