What Management Would Prefer You Didn't Know About Standard Chartered PLC

Last year was tough for Standard Chartered. Chairman Sir John Peace even remarked that the overall outcome for the Group was not as good as they would have liked. This year has provided no respite.

Savaged by the market

Even a brief look at the stock’s performance over the past 12 months and you can see just how on-the-nose the bank has been with investors.

Over the past six months, the stock is down 16%. Over the same time period the banking sector fell 2%. That compares with a fall in the FTSE 100 of 4%.

Over a 12-month time frame the stock is down around 25%. Again the banking sector only lost half that amount over the same period, and the FTSE 100 fell 4%.

What’s going on?

Yes, the regulators have tightened their grip on the banks, and admittedly there is more cautiousness in the market — especially given the outlook for the housing market and interest rates — but there are other pressing concerns for Standard Chartered at present.

Troubles in the United Arab Emirates

One such concern is its business in the United Arab Emirates. The world’s business press covered the story earlier this week saying the bank had been forced to close thousands of small to medium-sized business accounts in the region (that’s somewhere between 1,400 and 8,000 accounts), estimated to have a revenue of between $1 million to $35 million a year. It all relates to pressure that was applied to the bank from US regulators following a settlement with the New York State Department of Financial Services in August over charges of facilitating money laundering. Standard Chartered’s copped a $300 million fine and has been given a period of three months to end high-risk partnerships with businesses in the UAE.

Standard Chartered’s message to those customers was as blunt as its exit strategy. Thank bank said, “We regret to notify you that Standard Chartered Bank will no longer be able to provide banking services to you.”

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