StanChart head joins list of the contrite

Over the past five years – as the sins of the pre-crisis era have been punished by regulators – bankers have become used to ritual humiliation. On Thursday, Sir John Peace, chairman of Standard Chartered, joined the roll call of those forced to apologise publicly for their behaviour after infringing the terms of the bank’s deferred prosecution agreement with US authorities over sanctions breaches.

In the most abject apology that City pundits can remember hearing from a banker in recent times, Sir John admitted that remarks made a fortnight ago relating to StanChart’s breaches of US sanctions rules were “both legally and factually incorrect”.

Sir John said on March 5, as he spoke about the bank’s record 2012 financial results, that the breaches of US sanctions on Iran had not been “wilful” and were the result of “clerical errors”, directly contradicting the terms of settlement agreements with the US authorities.

The apology – made both externally and in a memorandum sent to the bank’s 89,000 employees – followed aggressive pressure from two of the US authorities involved in last year’s $667m fine and deferred prosecution agreement. The Department of Justice made clear that, without the retraction, the bank would have been liable to being indicted. “In denying that Standard Chartered acted wilfully, Mr Peace blatantly contradicted the bank’s acceptance of responsibility for its crimes. Under the terms of our agreement, Standard Chartered was required to retract the statement or be subject to prosecution.”

The Manhattan District Attorney’s Office said: “We rigorously monitor compliance [with agreements] and subsequently addressed this violation by Standard Chartered for not accepting responsibility for its misconduct. Under the terms of our agreement, we demanded a public repudiation of these violations and they complied.”

Analysts played down the relevance of the affair for the StanChart investment case, as did a number of shareholders contacted by the Financial Times. The bank’s share price, virtually unchanged at £17.16 on Thursday, is up about 7 per cent since the start of the year as investors continue to warm to the bank’s strong performance and its strategic focus on emerging markets, a haven from the headwinds hurting banks with a focus on the UK and continental Europe.

But the affair undermined the reputation of the chairman. “He’s been an idiot,” said one top banks analyst. Others described Sir John, who normally takes a low-profile role at the bank, as an “old-style bank chairman” who tends not to get closely involved in day-to-day operations. Although he is a non-executive, contracted to work three days a week, he is paid £1.15m a year, more than many of his peers.

It is unclear whether the incident will inflame tensions with the bank’s leading shareholder, Temasek, which is known to have been irritated by the way the original sanctions breaches were dealt with. However, the consensus view appears to be that the bank and Sir John have drawn a line under the affair.

The most direct parallel is with Stuart Gulliver’s apology to the US Senate. The HSBC chief executive said sorry several times for the bank’s money-laundering scandal in the US and Mexico, which prompted a $1.9bn fine. “The firm clearly lost its way,” Mr Gulliver said last summer, adding that the scandal was “shameful, embarrassing and very painful”.

In the UK, the soon-to-be-dissolved Parliamentary Commission on Banking Standards has been the most avid collector of apologetic remarks by senior bankers.

Last December, Sir James Crosby, HBOS’s former chief executive, said at the parliamentary hearing that he was “horrified and deeply upset” and “very sorry” for the near collapse of the bank. The mortgage bank was rescued by Lloyds Banking Group, which then needed a £21bn taxpayer bailout.

Not long after his words, former UBS chief executive Marcel Rohner came close to a mea culpa at the banking commission when he said he felt “shocked and embarrassed” when reading about the Swiss bank’s involvement in the manipulation of the Libor benchmark interest rate.

Apologies have become as global as the financial services sector itself. In Japan, Nomura last year apologised publicly for leaking information used for insider trading ahead of share issues in Tokyo. It expressed its “regret” and “sincerely apologise[d] for the trouble this has caused”.

In the US, Goldman Sachs’ chief executive Lloyd Blankfein four years ago gave a blanket apology for the bank’s part in the cheap credit boom. “We participated in things that were clearly wrong and have reason to regret,” he said. “We apologise.”

Recent scandals have turned even the most unapologetic bankers into converts. Just days before he stepped down last summer amid a £290m fine paid for the Libor scandal, Barclays then-chief executive Bob Diamond told staff that “no one is more sorry, disappointed and angry about these events than I am”. His words came just over a year after he had declared that the time for “remorse and apology” was over. Standard Chartered and Sir John Peace will be hoping that time has now come for them.

This article is subject to a correction and has been amended.

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