Standard Chartered saw a quarter of its value wiped away yesterday as furious investors sold the bank's shares in the wake of allegations by US regulators that the pillar of the British financial establishment facilitated money laundering on an industrial scale.
Though the bank pushed back strongly against the charges levelled by the New York State's Department of Financial Services (DFS) earlier this week that it illegally processed $250bn in transactions from Iran, Standard Chartered's dual-listed shares plummeted in both London and Hong Kong.
In the Far East, the bank's shares slumped by 14.9 per cent. In London they ended the day 16 per cent lower.
Adding to the bank's discomfort, there were calls in the UK for a parliamentary inquiry into the affair. John Mann, a member of the Treasury Select Committee, said: "The British Parliament should instigate an unbiased and far reaching investigation into money laundering in Britain."
Standard Chartered released a statement yesterday vigorously contesting the claims by the New York watchdog and claiming that the depiction of it as a "rogue institution" between 2001 and 2010 did not present "a full and accurate picture of the facts".
It argued that the total value of the transactions that contravened US regulations was just $14m, rather than the $250bn alleged by the DFS. It also claimed that the regulator's interpretation of the bank's behaviour in processing transactions on behalf of Iranian clients was "incorrect as a matter of law". But the robust response had little impact on investors' sentiment. One City analyst estimated that the Bank could face a fine of up to $1.5bn from the US regulator.
Last night Standard Chartered's chief executive, Peter Sands, broke off his holiday to deal with the crisis. He and his number two, Richard Meddings, have come under pressure to step down since the scandal broke.
Representatives of Standard Chartered have been summoned to appear before the US watchdog next week where they will be asked to account for the bank's behaviour.
Peter Sands, group chief executive
The former McKinsey management consultant was poached by Standard Chartered in 2002 to be its group finance director. Four years later he became the bank's top boss. Until this scandal broke he was touted by some as a potential successor to Sir Mervyn King as Bank of England Governor.
Richard Meddings, group finance director
The Oxford history graduate joined the bank in 2002 as head of risk and was promoted to his present position – effectively Sands' number two – in 2006. He was recently described as a potential "clean hands" replacement for Bob Diamond as Barclays boss.
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