Standard Chartered saw its stock plunge Tuesday after a poorer-than-expected third quarter update that revealed potential regulatory action over a 2009 flotation that authorities in Hong Kong are investigating.
The London-headquartered emerging markets bank no longer sponsors IPOs in Hong Kong but it could face barriers to the provision of other corporate finance services, as well as fines, as a result of the action. Other media have suggested that the IPO in question is that of China Forestry, whose shares were suspended from trading in 2011 due to accounting irregularities.
Standard Chartered didn't provide any details of which IPO that regulators are probing.
In the third quarter, the lender saw operating income fall faster than the pace at which it could cut costs and profit before tax of $458 million missed the consensus estimate of $530 million. Management also warned of continued tough trading in core markets across Asia, the Middle East and Africa.
Standard shares were down by more than 6% in early trading in London, touching lows of 660.0 pence ($8.50), shortly after the opening bell. It is up by more than 18% for the 2016 year-to-date, after opening the year at 564.0 pence.
Currently mired in a restructuring effort, the bank also underwhelmed investors with sub-optimal regulatory capital accumulation for the period, after its common-equity-tier-1 ratio fell by 5 basis points to 13% - against forecasts for a steady 13.5%.
Third quarter operating income remained flat with the previous quarter, at $3.5 billion, and was down 6% on the same period one year ago. This is while operating costs fell by just 4% on the year ago, to $2.4 billion.