StanChart's stumble may aid ANZ's Asian push
Hot on the heels of an admission of money laundering from HSBC, Asian-focused Standard Chartered is the latest lender to become entangled with tough US sanctions.
The string of explosive revelations against the two banks plays into the hands of ANZ, the Australian lender that is attempting grow aggressively through Asia.
The New York State Department of Financial Services overnight alleged that for almost a decade London-based Standard Chartered "schemed" with the Government of Iran and hid from regulators some 60,000 secret transactions involving at least $US250 billion.
The claim argues Standard Chartered reaped hundreds of millions of dollars in fees from the transactions.
A 27-page filing by the New York regulator is tied to an order for Standard Chartered executives to appear at a US hearing on Wednesday next week.
"(Standard Chartered's) actions left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes," the filing said.
Standard Chartered risks having its New York licence revoked - essentially preventing it from doing business in the US. It could also be required to submit to "independent, on-premises monitoring" of client transactions by an organisation nominated by the New York regulator - and it may cop a big fine, to boot.
Under US laws, transactions with Iranian banks are strictly monitored and subject to sanctions because of government concerns about possible financing of Iran's nuclear programs and allied terrorist organisations.
As an emerging rival in the Asian region, ANZ arguably stands to benefit from any loss to the reputation - and operations - of Standard Chartered.
For its part, Standard Chartered said in a statement that the bank "strongly rejects the position or the portrayal of facts as set out" in the Department of Financial Services claim.
"The Group does not believe the order issued by the DFS presents a full and accurate picture of the facts," the statement said.
All this, including the prospect of strict US monitoring is something that could represent a major turn-off for Standard Chartered's Asian-based clients.
At the same time, bigger rival HSBC is also likely to be distracted for the medium term after it last week apologised for "shameful" systems breakdowns that failed to stop it laundering money for terrorists and drug barons. Most of the affair relates to HSBC's Mexican operations and Europe's biggest bank has set aside $US700 million for potential fines in the US.
HSBC will also spend $US400 million beefing up compliance around the world, something that could again put emerging market customers offside.
ANZ has long modelled itself as a challenger to Standard Chartered. It hired several of UK's bank's senior executives - including current ANZ Asian boss Alex Thursby.
While HSBC and Standard Chartered have substantially bigger franchises through Asia, ANZ has been deliberately targeting business and trade clients of both banks as part of efforts to expand its balance sheet through emerging markets, particularly in east Asia.
Still, ANZ has felt some of the wrath of US financial regulators over the years.
The Melbourne-based bank was given a $US5.75 million fine by the US Treasury in 2009 after it admitted to breaching US trade bans.
Earlier last decade ANZ had engaged in about $US50 million worth of US-dollar transactions with Cuba and Sudan - countries also subject to sanctions by the US government.