By Marc Jones and Chris Mfula
LONDON (Reuters) – Zambia’s Securities and Exchange Commission (SEC) has sanctioned Standard Chartered for mis-selling a Chinese property company’s bonds to one among the bank’s local wealth clients at the peak of the Asian country’s real-estate crisis, in line with a source.
The source accustomed to the matter told Reuters that the UK-headquartered bank, which is currently seeking to sell its wealth and retail banking businesses in Zambia, was facing “enforcement motion” for 2 breaches of SEC rules following a months-long investigation.
The primary was that it had didn’t disclose “material information” in regards to the bonds it sold in March 2022. Those bonds, issued by state-backed Chinese developer Sino-Ocean, defaulted just over a 12 months later and are actually, like many within the sector, almost worthless.
As well as, the SEC found Standard Chartered had also used “exclusionary” contract clauses, which meant the client held all responsibility for the risks, which works against Zambia’s securities rules.
In a press release to Reuters, Standard Chartered said: “We respect the final result of the Securities Exchange Commission in Zambia, nonetheless, in accordance with appropriate local procedures we’ll respectfully be exercising our right to appeal.”
“We’re fully aware of this matter, and we’re reviewing the crucial details to make clear the situation. It’s our priority on the Bank to make sure compliance with regulatory standards across all of our markets.”
The SEC, which began its investigation of the case in April, said it was not capable of comment on the matter when asked by Reuters. Under Zambia’s Securities Act, Standard Chartered now has 30 days to lodge its appeal.
Zambia’s SEC has the facility to wonderful, or publicly or privately “censure or reprimand” lenders, although it could possibly’t formally organize them to compensate customers for mis-selling.
Reuters wasn’t able to determine what penalty the regulator is planning to impose on Standard Chartered.
The lender announced in November it was seeking to sell its Zambian wealth and retail banking businesses alongside those in nearby Botswana and Uganda.
It has operated in Zambia for nearly 120 years making it the country’s oldest bank.
It’s currently reducing its overall footprint in Africa, nonetheless, having also sold its Tanzania business and subsidiaries in Angola, Cameroon, The Gambia, and Sierra Leone within the last couple of years.
(Additional reporting by Chris Mfula in Lusaka. Editing by Elisa Martinuzzi and Mark Potter)