Earlier in August, Standard Chartered Bank (StanChart) was accused by US authorities of laundering about $250 billion of Iranian money around the global financial system.
While the tussle has continued in recent months, at the time of this article, the bank was reportedly close to settling further charges with the US Treasury, having already agreed to pay a New York State regulator US$340 million.
This is another blow to the reputation of the banking industry, already in poor shape by the likes of the Barclays’ Libor scandal; JP Morgan’s shock major losses; and a US report accusing HSBC of doing business for criminals and terrorists.
Obviously, this recent crisis has the public doubting StanChart’s Here for Good proposition. Can StanChart find a way around the situation and will this still be a credible line for it to go by?
Karen Flynn, principal consultant, Euro RSCG Siren believes the negative impact on StanChart’s reputation will possibly be “localised” to the US. “The fundamental reason for the bulk of StanChart’s customers selecting to work with them is the advantageous loan structure it can offer to such clients. Therefore, StanChart is unlikely to suffer business losses globally as a result of this debacle; it remains a highly profitable bank.”
However, she adds that poor responses from its senior brass and written responses by StanChart are brash. “These will continue to alienate StanChart in the short term until it makes a conscious effort to address the issue with full disclosure and a tone of appreciation for the perceptions it now has to break down.”
Being a bank of more than 150 years, Standard Chartered arguably has “margin for error” goodwill to keep with investors rather than investigators, says Mohit Gopaldas, managing director, Identity Counsel. “However, future action and more positive contributions will need careful governance, along with fairly strong communication campaigns.”