It was pretty clear yesterday that the government still doesn’t quite know what position to take on Standard Chartered, which has been accused by a New York regulator of breaching sanctions on Iran. Even the usually vocal Vince Cable has been completely silent on the issue; while the Treasury merely emitted a neutral statement saying “these are allegations at this stage”.
Not so Boris Johnson. The London mayor has come out with a trenchant defence of the bank, saying to the FT:
“We must be very careful that the proper desire to root out wrongdoing does not become an excuse for protectionism and a self-interested attack on London’s status as the world’s pre-eminent financial centre.”
You could say this is a typical BoJo response, a kneejerk defence of the City of London, which is after all the biggest employer in the capital which he runs. His similar defences of other banks have seemed rather partisan.
Yet on this occasion the mayor seems to have captured the Westminster zeitgeist (I say Westminster, in reality most MPs are elsewhere in August) not only among Tory MPs but also their Labour counterparts.
Several MPs told me yesterday that they believed US regulators are pursuing an anti-City of London agenda in their assault on Standard Chartered, suggesting it was part of an apparent campaign to weaken a rival financial centre.
John Mann, a Labour member of the Treasury select committee, said he detected an “increasing anti-British bias by US regulators and politicians” which could have been influenced by a desire to shift business from the City to Wall Street. “This is a real power grab [by US authorities] and the stakes are very high,” said Mann.
Opposition Labour politicians have previously been severely critical of the banking industry; but even they are now concerned about the spate of negative headlines about Barclays over its involvement in the Libor scandal, HSBC over money laundering, and now StanChart.
Pat McFadden, another Labour member of the Treasury committee, said all banks should abide by the rules.
“But we have to be careful after all the recent reports not to think of London as the Wild West and New York as some kind of perfect financial nirvana; that would not be accurate.”
There are concerns that the New York “Department of Financial Services” is a new regulator determined to make its name. StanChart is supported by Conservative MPs such as Sam Gyimah, who told me that it was right for regulators to pursue wrong-doing wherever it was suspected. But also:
“What we have seen in the case of Standard Chartered is a highly inflammatory report that is effectively the case for the prosecution.”
Kwasi Kwarteng, another Tory MP, told me that US regulators have a history of pursuing businesses on “slender evidence”.
“Some of these investigations are politically driven, I wonder if this New York regulator is … looking for a high-profile scalp,” he said.
Jim Pickard
Kiran Stacey