Standard Chartered has fallen the most in almost 24 years as an analyst estimated it may face costs of $5.5bn after being accused of violating U.S. money laundering laws over to its dealings with Iranian banks.
The bank's shares fell almost 24% in London trading Tuesday morning, their biggest decline since 1988, the earliest date for which data are available. A massive $16bn has been wiped off the bank's market cap.
Bloomberg reports that Standard Chartered may lose its license to operate in New York state after the Department of Financial Services found the bank conducted $250bn of deals with Iranian banks over seven years and earned hundreds of millions of dollars in fees for handling transactions for institutions subject to U.S. economic sanctions. The London-based lender has rebutted the allegations, saying it 'strongly rejects the position and portrayal of facts' made by the regulator.
The bank may be fined $1.5bn by U.S. regulators, lose about $1bn of revenue from its Iranian operation and a further $3bn in market value if senior managers quit, Cormac Leech, an analyst at London-based Liberum Capital Ltd. who rates the stock a buy, wrote in a note to investors Tuesday.
'It’s unclear whether senior management will resign for the alleged shortcomings given that they have been in their current roles for much of the relevant period, raising the risk of kitchen-sinking on arrival of new management', Leech said.
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