Good morning
The headlines:
- Oh Standard Chartered!!
Link: the Iran expulsion.
According to the New York regulator, Standard Chartered has spent the last seven years in the laundery business, flagrantly soaping over $250 billion worth of Iranian money. This violation of federal money laundering laws may leave Standard Chartered banned from operating in New York.
The issue seems to revolve around $250 billion worth of wire transfers that passed through SC’s New York branch. At the time, the banks were required to identify any wire transfers that came from countries under US sanctions.
SC, um, didn’t. And it wasn’t really an omission so much as a “repairing” of the wire transfer to remove any reference to Iran.
When told by the head of their US banking unit that this could all go horribly wrong, the response was “Who are you to tell us, the rest of the world, that we’re not going to deal with the Iranians?”
Give-or-take an expletive.
SC has responded to the accusations by saying that “99.9% of its transactions with Iran complied with US Treasury Regulations” – which I think means that “99.9% of the transactions they’re talking about didn’t take place in the US”*.
This makes Standard Chartered just another British bank in the list of banking scandals. After, you know, Barclays and HSBC.
*i thought that 99.9% was a figure of speech. Apparently not – the bank has used it to quantify its potential non-compliance at $14 million.
- Knight Capital is a damnsel.
Link: and in her distress, she sold herself.
The weekend rescue deal after last week’s crisis resulted in a sale of convertible stock for $400 million (the losses reported on August 1). The stock will be convertible into 267 million ordinary shares at $1.50 a share. The current share price is floating around the $3 mark.
How awesome is that for the rescuers? Preferred debt if Knight Capital tanks; and a share price differential of 100% if the conversion option is exercised. Okay, so not really 100% – because the share conversion will be “dilutive”**. But still. Higher than $1.50! The new issue of shares will constitute 73% of the ownership of Knight Capital when the preferred stock is converted.
So the old shareholders lost 61% of their share price. And then they suddenly find themselves owning an effective quarter of what they did last week.
Mind-blowing!
**reduce the share price. Basically – you take the market value (shares in issue before conversion x share price), and divide it by the new number of shares to get to an approximate closing share price.
- Monti calls for unofficial help, but won’t do it officially.
Link: the psychological dissolution.
The Italian PM warned Europe that it could break up if more urgent action isn’t taken. By “urgent action”, he means “ECB action”. And by “ECB action” what he means is “ECB action without conditions”.
This is all in a bid to avoid formally requesting aid. Which would come with aforementioned conditions…
That’s all for now.
Have a good day.
