Standard Chartered Woes

Standard Chartered was basking in glory these days when most of their counterparts were fighting a battle against economic slowdown and other issues in Europe and USA. It had good reserves, low exposure to euro zone and wasn’t guilty of LIBOR manipulations.

But - out of the blue-moon came the thunder that upset and injured Standard Chartered‘s stock price and its top management. Financial Thoughts believe that the style of New York State’s Department of Financial Services accusations of Standard Chartered is a surprise for everyone.

Standard Chartered has the right to defend and they are doing that by even spreading the news that they may ‘Fight the Fed’. Let us wait and see.

It is interesting to note that on 30 July 2012, UK's Financial Times (FT) carried an article (http://www.ft.com/cms/s/0/2ae72322-da45-11e1-b03b-00144feab49a.html#ixzz237nCKZSB) that mentioned about a company that attracted sanctions from US for Iran deals.

FT states that the US secretary of state had said that this company had …..

”….. provided more than $70m in refined petroleum to Iran in multiple shipments in late 2010. The company has tended to work with local banks, and with international banks including Standard Chartered.” 

Read the last sentence again! Other international banks are also involved with Iranian shipments mentioned above. So why singling out Standard Chartered alone? 

A few of my business clients are quick to point out that even US based companies (incl. oil field services co.) have business interests in Iran.

The media carries a lot of news / rumours on Standard Chartered’s possible defence against the allegations it broke US sanctions on Iran that could complicate things further – more counter lawsuits, fines and the loss of business, besides reputational damage . Some of the rating institutions are itching to downgrade Stan C's 'AA-' credit rating - this could impact its cost of refinancing.

For some investors, this may be a good news! After the dust settles, if Standard Chartered bank’s stock price goes down further, it may worth to have a look at it as an investment alternative.