Shares of British banking giant Standard Chartered fell more than 23% on the London Stock Exchange Tuesday after a London analyst estimated the bank could face costs of $5.5 billion related to accusations that the bank helped Iran avoid sanctions.
On Monday, banking regulators in New York alleged Standard Chartered concealed $250 billion worth of transactions over nearly 10 years. The New York State Department of Financial Services accused the London-based banking group Monday with concealing 60,000 transactions with Iranian clients, including the Central Bank of Iran, from 2001 to 2010.
In addition to the cost estimate, Liberum Capital analyst Cormac Leech said Tuesday that it was unclear if the bank's senior management would resign. And Standard & Poor's issued a note, saying the bank's ratings were "currently unaffected" by the investigation.
On Monday, thinly traded shares of Standard Chartered (SCBFF) listed on U.S. over-the-counter exchanges fell more than 10% on high volume.
The United States and its allies have increased economic sanctions against Iran during the past few years in an effort to deter the Islamic Republic from developing its nuclear capabilities. Iran has argued that its goal is to produce energy, but U.S. officials say the Iranians are developing weapons.
Standard Chartered allegedly falsified business and official records to mask transactions with Iranian customers that were subject to U.S. economic sanctions, the New York State Department of Financial Services said. In exchange, the global banking group reaped "hundreds of millions" of dollars in fees, according to an order issued by the New York authorities.
"Led by its most senior management, Standard Chartered designed and implemented an elaborate scheme by which to use its New York branch as a front for prohibited dealings with Iran – dealings that indisputably helped sustain a global threat to peace and stability," the regulators said in the document.
The regulator has ordered Standard Chartered executives to appear in New York on August 15 to answer the charges. Standard Chartered could face fines and potentially have its U.S. banking license revoked.
Standard Chartered said in a statement that it "strongly rejects the position or the portrayal of facts as set out in the order issued by the DFS." The bank had previously said it was conducting a review.