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StanChart's board under pressure

Wednesday, August 20, 2014 - 02:20

Standard Chartered will pay a $300 million penalty and suspend or exit some important businesses after failing to weed out risky transactions. As Joanna Partridge reports the reputational damage to the bank could hurt more than the fine.

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Another fine from U.S. regulators linked to risky banking transactions. This time it's a relatively small $300 million penalty for Standard Chartered. Their misdemeanour - failing to have adequate money laundering controls two years after they were told to fix them. George Hay is from Reuters Breakingviews. SOUNDBITE: George Hay, Associate Editor, Reuters Breakingviews, saying (English): "There's this pre-existing impression about Standard Chartered that Peter Sands, the chief executive, and John Peace, the chairman, are not as laser-guided on the kind of operational nitty-gritty as they could be. Now, rightly or wrongly, but that's the impression, so something like this comes out, where it's the nitty-gritty that's the problem and people go, oh." In recent years UK-based Standard Chartered has been a shining light in a gloomy sector. Its focus on Asia, Africa and the Middle East keeping profits up while others struggled in a difficult economic climate. But things have changed and some investors believe the bank's strategy has begun to misfire. SOUNDBITE: George Hay, Associate Editor, Reuters Breakingviews, saying (English): "They came out with a profits warning in June and the days when they were growing at a 10% clip, revenues-wise, every year, those are long gone. So that is the main problem and I think what you probably see is if StanChart's operational performance doesn't improve, soon, then investors will go, well you're not doing too well on the operational side, you're not doing too well on complying with regulatory issues." It could certainly be a problem for CEO Peter Sands - recent speculation suggests he could be in the firing line. But Michael Hewson from CMC Markets says Standard Chartered's troubles should be put in context. SOUNDBITE: Michael Hewson, Market Analyst, CMC Markets, saying (English): "I think this highlights the overarching regulatory oversight that banks are under right now and I certainly think this is not unique to Standard Chartered, it's certainly going to hurt banking business all over the world." Standard Chartered says it will urgently sort out its anti-money laundering controls and improve compliance programmes. It will also suspend or exit some important businesses in Hong Kong and the United Arab Emirates. But some say the bank's reputation has been damaged by this second fine in two years and that could impact its international business.

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StanChart's board under pressure

Wednesday, August 20, 2014 - 02:20