Standard Chartered Shares Struggle After $3 Billion Sell-Off

Standard Chartered’s shares experienced a modest rise on Monday, yet they remained significantly below their previous levels following a dramatic sell-off last week. The bank’s stock increased by 1% at the start of trading, reaching 1,319.50, but this was far from the 1,407 level prior to the decline. The sharp drop occurred after United States Congresswoman Elise Stefanik called for an investigation into the bank over alleged terrorist payments, leading to a market capitalisation loss of approximately $3 billion (£2.21 billion).

The turmoil began when Stefanik posted a letter on social media platform X, prompting a sell-off that saw the bank’s shares plummet by as much as 9%. The congresswoman’s call for action focused on a looming deadline, as the case against Standard Chartered is set to expire on August 19. In response to the allegations, the London-listed bank firmly stated that the claims made in a long-standing civil case are “entirely false” and have been dismissed by US courts multiple times.

The allegations stem from a whistleblower action initiated by Brutus Trading, which claims that Standard Chartered unlawfully processed and concealed billions of dollars in transactions linked to Iran and terrorist groups. The bank has categorically denied these accusations, asserting that the alleged $9.6 billion in unlawful transactions are unfounded and have been consistently rejected by the US judicial system. Standard Chartered expressed confidence that the dismissal of the case would be upheld on appeal.

Market Reactions and Analyst Perspectives

Despite the recent turmoil, analysts continue to monitor Standard Chartered’s stock closely. Joseph Dickerson, an equity analyst at Jefferies, noted that the circumstances surrounding the Brutus Trading case are not new, having been in circulation since 2012. He indicated that the lack of new information suggests the risk of litigation remains limited for the bank. Jefferies has maintained its target price for Standard Chartered shares at 1640p.

Earlier this year, Standard Chartered faced additional legal challenges, including a $2.7 billion lawsuit linked to the 1MDB scandal, one of the largest financial fraud cases globally. The bank reportedly processed over 100 questionable transfers between 2009 and 2013, despite evident red flags indicating potential criminal activity. In response, Standard Chartered has vehemently rejected any claims from the 1MDB entities, highlighting that the liquidators acknowledged the companies involved were “shell companies with no legitimate business.”

As Standard Chartered navigates these turbulent waters, the bank remains focused on upholding its reputation and addressing the legal challenges it faces. The outcome of both the Brutus Trading case and the 1MDB lawsuit could significantly influence the bank’s future and its standing in the international financial market.