During a press conference call on Wednesday, Sands rebuffed the New York State Department of Financial Services’ charges that the bank had “schemed” to bypass US anti-money-laundering sanctions and process up to $250 billion on behalf of Iranian clients over 10-years.
Standard Chartered’s share price fell as much as 16% on news of the allegations on Monday, but has recovered in recent days and was trading around 1,367 pence in London on Thursday.
In a note by Ian Gordon, an analyst at Investec, he argued that while it would be rare for any bank’s press conference to “prove pivotal”, Sands’ performance should act as a “source of further comfort to shareholders”. He added: “This doesn’t look like a bank ‘in crisis mode’, as one might reasonably expect.”
During the call, Sands said that the bank “rejects the position and portrayal of facts by the Department of Financial Services” and that the regulator’s allegations have been “very damaging” to its reputation.
Sands reconfirmed his bank’s view that of 150 million transactions reviewed, there were only 300 with a value of $14 million that may have breached US anti-money laundering sanctions with Iran – substantially less than the 60,000 transactions worth $250 billion the DFS’s superintendent Benjamin Lawsky has alleged.
None of the transactions reviewed by the bank were linked to terrorist organizations, according to Sands, who said that “there are lots of matters in that order that frankly either we don’t recognize or we don’t understand or are factually inaccurate.”
He added: “There was no systematic attempt to circumvent sanctions.”
In the note, Gordon wrote: “Clearly, on these modest numbers, any ‘read- across’ from prior regulatory sanctions suggests a very small fine indeed.” He added: “Peter has apologized for these limited errors, but, based on Standard Chartered’s version of events, we believe that this should be seen in context, and in marked contrast to many more genuine banking scandals of the recent past.”
Believing that Lawsky “has picked on the wrong bank”, Gordon wrote that Standard Chartered was still open to “ongoing regulatory risk” but the “response over the past 24 hours from the broader regulatory and political community appears to provide a more measured perspective, and may make increasing market consensus expectations relevant again.”
Investec has buy rating on Standard Chartered with a price target of 1,800 pence a share.