The furore has already cost StanChart dear – it lost more than £8bn of its value on Tuesday alone. But has this all been a (very expensive) storm in a teapot?
Sands seems to think so. ‘There was no systematic attempt to circumvent sanctions,’ he said of the allegations. ‘Frankly, there is a lot of material here that we do not recognise or understand, or that is factually inaccurate.’
That said, Sands was forced to admit that while not ‘systematic’, StanChart had processed some deals that violated US sanctions – but 300, not 60,000, worth some $14m rather than the billions bandied about by the Americans. ‘This was clearly wrong and we are sorry that they happened,’ he said.
These deals fell under the so-called ‘U-turn’ category - highly-regulated transactions in dollars that can be processed on behalf of Iranians provided that a bank, which is neither American or Iranian, acts as intermediary. These were scrapped in 2008 because of fears that Iran was using US banks to finance nuclear weapons and missiles programmes. On Wednesday, Sands reiterated that more than 99.9% of the $250bn worth of U-turn transactions undertaken by StanChart complied with US regulations.
Investigations by the US Treasury are currently underway. But information has been steadily leaked to the press since the Office of Foreign Assets Control started digging, fueling rumours of an ‘anti-British bias’. ‘We were surprised in the manner of the announcement and that it was done without giving us any notice,’ said Sands, who found out about the scandal around the same time as the general public – when it made front-page news.
London Mayor Boris Johnson was more aggressive in his response, warning regulators in New York to desist in their ‘self-interested attack on London's status as the pre-eminent financial centre’. While John Mann, member of the UK Parliament's finance committee, added: ‘I think this is Washington trying to win a commercial battle to have trading from London shifted to New York.’
Battle lines have been drawn between Washington and London and the fight is already getting dirty. New York regulators have dug up an alleged email/conversation/altercation between StanChart FD Richard Meddings and a New York branch officer that reads: ‘Who are you fucking Americans to tell us, the rest of the world, that we're not going to deal with Iranians.’ Sands furiously denies that such an email exists.
The next few days will be crucial for Standard Chartered as this transatlantic war progresses. ‘Clearly this has been very damaging and it would be unrealistic to pretend otherwise,’ says Sands. But could the storm already be subsiding? Shares in the bank have rebounded 7% in London trade, and UK regulators are now poised to counter-sue the Americans – tit for tat. The question is, will this war of attrition leave either side victorious? Or simply succeed in damaging reputations on both side of the pond beyond repair?