ANZ chief executive Mike Smith says recent blows to the reputations of Asian-focused rivals HSBC and Standard Charted are very serious.
Allegations of money laundering and breaching trade sanctions – which US authorities have made against the two major banks – are likely to reflect negatively on all banks, Smith said.
“Quite clearly any reputational issues are very serious,” Smith told BusinessDay today.
“I think these reputational issues are just another problem in terms of the whole banking industry”.
“They recover from one issue and have been hit by others”.
Smith’s comments come as Standard Chartered, a leading bank in Asia, agreed overnight to settle US allegations that it helped Iranian clients dodge sanctions, copping a fine of $340 million ($320 million) from New York’s banking watchdog in the process.
The 160-year-old bank had denied accusations that it systematically hid $250 billion worth of Iranian client transactions that were carried out over ten years.
Under the terms of the deal, Standard Chartered agreed to its transactions being monitored for two years and to appoint auditors to investigate compliance with US sanctions.
The prospect of US monitoring of transactions is something that could represent a major turn-off for Standard Chartered’s Asian-based clients.
As an emerging rival in the Asian region, ANZ arguably stands to benefit from any damage to the reputation of Standard Chartered.
At the same time, bigger rival HSBC is also likely to be distracted for the medium term after it last month apologised for “shameful” systems breakdowns that failed to stop it laundering money for terrorists and drug barons.
Most of the affair relates to HSBC’s Mexican operations and Europe’s biggest bank has set aside $700 million for potential fines in the US.
ANZ has long modelled itself as a challenger to Standard Chartered. It hired several of UK’s bank’s senior executives – including current ANZ Asian boss Alex Thursby. CEO Smith joined ANZ from HSBC.
While HSBC and Standard Chartered have substantially bigger franchises through Asia, ANZ has been deliberately targeting business and trade clients of both banks as part of efforts to expand through emerging markets, particularly in east Asia.
ANZ has also felt some of the wrath of US financial regulators over the years. The Melbourne-based bank was given a $5.75 million fine by the US Treasury in 2009 after it admitted to breaching US trade bans.