Banking bust-up far from Standard

The row between global bank Standard Chartered and a US financial regulator is heating up.

UK officials yesterday took aim at the Stateside investigation that dubbed the British lender a “rogue institution” and claimed it hid $250 billion of Iranian transactions.

Benjamin Lawsky, head of the recently created New York State Department of Financial Services, made headlines around the globe earlier this week by launching an explosive attack on Standard Chartered for allegedly inappropriate transactions with Iranian clients.

In a 27-page summary of his department’s investigation, Lawsky accused the bank of concealing the details of nearly 60,000 US dollar payments involving Iran - around 30,000 of which he claims originated at the bank’s Dubai office.

However, while the regulator has threatened to strip Standard Chartered of its New York licence and claims more than $250 billion of transactions breached its rules, the British bank admits violations of no more than $14 million.

Amid signs of a backlash against Lawsky’s move to publicly slam the bank, reports yesterday said US government regulators were “blindsided and angered” by the New York department’s attack.

Lawsky’s decision to release embarrassing communications and details of the bank’s alleged defiance of US sanctions against Iran, is in sharp contrast to previous cases which have usually been settled through negotiation - with public shaming kept to a minimum.

The loss of a New York banking licence - and the right to conduct transactions worth hundreds of billions of US dollars - could be a death knell for a global bank like Standard Chartered.

The bank said it “strongly rejects the position and portrayal of the facts” made by the New York regulator. It also said that it “ceased all new business with Iranian customers over five years ago”.

Lawsky’s approach has touched a nerve with some in London too. Standard Chartered is the third British bank to be ensnared in US law enforcement probes in recent weeks, following previous investigations into Barclays and HSBC.

“I think this is Washington trying to win a commercial battle to have trading from London shifted to New York,” said John Mann, an MP on the British parliament’s finance committee.

The governor of the Bank of England yesterday criticised the New York regulator for accusing Standard Chartered before other regulators had completed their own investigations.