Fitch keeping an eye on Standard Chartered

Credit ratings agency Fitch has clearly mastered the art of stating the obvious as it has opined that alleged regulatory and legal violations by emerging markets focused bank Standard Chartered could be damaging to the bank's reputation.

The investigation by US regulators is a "negative rating factor for Standard Chartered Bank ('AA-'/Negative) and for its parent, Standard Chartered Plc ('AA-'/Negative)," Fitch said.

Nonetheless, the agency believes it's still too early to guess at the eventual outcome given the different stances taken by the bank and the regulators. On Thursday, Standard Chartered threatened with counter-suing New York regulators in response to the accusations of alleged dealings with the Iranian government.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The Fitch analysts expect to have more clarity on the possible outcomes after the hearing scheduled for August 15th.

"The accusations and strong market reactions to it have damaged the bank's reputation and it is possible that its franchise will suffer depending on how and when the case is resolved.

"However, Standard Chartered has informed Fitch that deposit outflows have been limited so far and that its USD [US dollar] liquidity has remained strong. The bank has substantial sources of USD liquidity outside its New York branch."

Standard Chartered currently trades down 0.92% at 1350.5p.

JM