Standard Chartered Shares Down Nearly 20% on Money Laundering Allegations
We are seeing bad news for banks once again and the daggers are out for Standard Chartered, with US regulators flexing their muscles.
is being absolutely smashed this morning, down nearly 20%, as investors fear that the bank might have been doing something illegal for years.
On top of this, the UK shares market
is attempting to assess the potential long-term reputational damage, as well as the possibility that the bank may lose its New York banking licence.
This is something that any global bank would want to avoid no matter how much of their business is generated outside of the world's biggest economy.
The bank is vehemently defending its past Iranian business and the scale was nowhere near as much as the US authorities have made out.
Nevertheless, the news has been enough to cause a serious backlash for its share price as investors fear that this could seriously hamper their global business prospects.
This is yet another example of why you don't want to upset the US. Senior managers within the bank need to be more careful when speaking to their American counterparts, rather than using four letter words.
Not only will there be serious ramifications for Standard Chartered
, but also for the wider banking sector as this latest attack on a non-US institution unfolds.
New York has long been envious of London's position as a global financial centre and there are some concerns being raised about how much focus they are putting into foreign banks.
In recent years Barclays
, Lloyds and, more recently, HSBC have all been at the painful end of US investigations and have had to pay hefty fines.
It will be interesting to see where this one goes and it is yet another chapter in a very long book of banking sector woes.
The Financial Spreads 15 minute chart shows how Standard Chartered shares dropped after the news broke:
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Simon Denham, 7 August 2012