Pressure was growing last night for the two top executives at Standard Chartered, Peter Sands and Richard Meddings, to resign in the wake of accusations that the British bank laundered $250bn (£160bn) of Iranian money over the past decade.
The UK bank launched a trenchant fightback against the charges from the New York state department of financial services yesterday, but City analysts nevertheless suggested it would probably be impossible for Standard Chartered's present senior management to survive, given the gravity of the allegations and the scope of the evidence that is already in the public domain.
"No names have been mentioned [in the US report] but the chief executive and the finance director were with the bank at the time so the focus will intensify on those two," said Michael Symonds of Daiwa Capital. "If they didn't know [about the money laundering], the charge will be levelled that they were asleep on the job."
Mr Sands has been chief executive of Standard Chartered since 2006. Mr Meddings was appointed group financial director in the same year. Both men joined the bank in 2002, not long after the alleged Iranian money laundering began. Mr Meddings also previously oversaw governance in the US, where the illegal transactions were said to have taken place.
Christopher Wheeler, an analyst at Mediobanca SpA in London, agreed that the future for the pair looked difficult. "Those guys are slap bang in the middle," he said. "It's too early to say who will fall on his sword as it depends on what is found, but it really doesn't look good."
The state department of financial services accused Standard Chartered of engaging in "flagrantly deceptive actions" over a 10-year period to disguise some 60,000 transactions that contravened US financial sanctions on Iran. But a statement from Standard Chartered said the New York regulator had not presented "a full and accurate picture of the facts". The bank has been called by the regulator to give evidence at a hearing in the US next week. It will be asked to defend its conduct and explain why its US banking licence should not be revoked.
The crisis engulfing the top executives at the bank, which had previously enjoyed a spotless reputation for financial and ethical probity, could have ramifications far beyond Standard Chartered.
"Not long ago Peter Sands was being touted as the next Governor of the Bank of England. Obviously the whole game is changed," said Mr Wheeler. The crisis could also create problems for the bid of Lord Turner, the chairman of the Financial Services Authority, to succeed Sir Mervyn King on Threadneedle Street.
Lord Turner was a non-executive director at Standard Chartered between 2006 and 2008, where he was a member of the board's audit and risk committee and also its remuneration committee. Finally, Mr Meddings was regarded as a prime candidate to replace Bob Diamond as chief executive of Barclays. Analysts have lengthened the odds on that transfer taking place in the wake of the revelations.