Standard Chartered faces sanctions over Hong Kong flotation 

Standard Chartered has become ensnarled in another regulatory problem after admitting it faced potential sanctions from the Hong Kong authorities over its handling of a stock market flotation.

As the London-listed bank reported its third quarter results, it admitted that the Hong Kong Securities and Futures Commission had warned it intended to take action against the bank in relation to an IPO in 2009.

Standard Chartered, which is focused on emerging markets, said “there may be financial consequences” for its securities arm.

The investigation adds to the list of regulatory problems at Standard Chartered, whose new chief executive, Bill Winters, is 12 months into a strategy to retreat from riskier businesses after bolstering its capital through a £3.3bn cash-call a year ago.

The shares fell 6% to 668p – the biggest drop in the FTSE 100 – after Winters admitted that revenue was not rising fast enough and said the Bank of England had ordered it to hold more capital.

“We have made progress executing the strategic actions announced a year ago. We now have a stronger balance sheet, reduced concentrations and are becoming more efficient, but income and profit levels are not yet acceptable,” Winters said.

“Market conditions are expected to remain challenging,” the bank said.

Pre-tax profits for the nine-month period were $1bn (£816m) compared with $2.5bn a year ago. In the third quarter, the group produced an underlying profit of $458m compared with a loss of $139m a year earlier.

Winters confirmed that Standard Chartered had told the US Department of Justice about allegations of bribery involving the Indonesian power group MAXpower, which has in the past declined to comment on the alleged bribery.

There was no update on the ongoing UK investigation by the Financial Conduct Authority into the effectiveness of its controls against financial crime.

He gave little detail about the new investigation in Hong Kong. Last week, Swiss bank UBS also said it faced an investigation in Hong Kong.

In February, Standard Chartered reported its first annual loss since 1989 after it was knocked by restructuring costs and repricing of complex financial instruments. The shares dived to 385p at the start of the year and are below the 713p they traded at a year ago.

It is a dramatic reversal of fortunes for Standard Chartered, which survived the 2008 banking crisis unscathed but started to experience problems in 2012 when the US regulators fined it for breaching sanctions.

Winters was named chief executive in February 2015 during a boardroomshakeout. He is now focusing on closing risky operations.

Source: TheGuardian

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