Shares of major banks across bourses worldwide saw losses in the wake of allegations that they had handled large amounts of dirty money for almost 20 years.
They include HSBC, Deutsche Bank and JPMorgan Chase, which are among the top banks highlighted in an investigation by BuzzFeed News and the International Consortium of Investigative Journalists that shed light on potentially dubious transfers worth about US$2 trillion (S$2.7 trillion) between 1999 and 2017.
HSBC slipped 2.05 per cent in Hong Kong yesterday, after tumbling to its lowest level in 25 years on Monday when it closed 5.3 per cent lower.
Standard Chartered, another bank named in the international probe, declined 2.29 per cent yesterday.
In New York, JPMorgan fell 3.1 per cent on Monday following a bruising session for other large banks named in the report.
In Frankfurt, Deutsche Bank's stock gave up 8.8 per cent on Monday and Standard Chartered, which is also listed in London, dropped 5.8 per cent. Both stocks have partially recovered as at 2.30pm GMT yesterday.
In Singapore, DBS fell 1.25 per cent yesterday, while United Overseas Bank lost 0.99 per cent. OCBC Bank closed 0.71 per cent lower.
The local lenders were named in the leaked files, which noted that banks in Singapore handled about US$4.5 billion in suspicious transactions between 2000 and 2017.
The Monetary Authority of Singapore told The Straits Times on Monday that it was "closely studying" the reports and "will take appropriate action based on the outcome" of its review.
A report by DBS Equity Research yesterday noted that global bank stocks had declined "in a knee-jerk reaction to the leaks amid fears over the possible implications that may include penalties".
However, any negative reaction among Singapore bank stocks should be temporary, the research report noted.
The fallout was more palpable for some banks such as HSBC, which told its staff to stop posting on all the bank's social media accounts over fears of "negative reactions" to the revelations.
In a memo to employees on Monday, Ms Tricia Weener, head of marketing for HSBC's global commercial and investment banking arms, wrote: "Given the current news coverage, a decision has been taken to pause all HSBC proactive social media posts with immediate effect (except for customer responses in banking services) to avoid negative reactions and comments across our channels and content."
HSBC is one of about 90 banks named in the leaked documents. In its case, the bank was said to have processed million of dollars in transactions for a Chinese Ponzi scheme, leaving victims of the scam unable to recoup losses.
The investigation was led by more than 100 international media outlets from 88 different countries and is based on over 2,000 suspicious activity reports (SARs) submitted to the United States Treasury Department's financial law enforcement agency, FinCEN, by banks.
Five banks - JPMorgan Chase, HSBC, Standard Chartered, Deutsche Bank and Bank of New York Mellon - were specifically accused of continuing to move assets of alleged criminals, even after being fined for earlier failures to stem flows of dirty money.
That said, "SARs are not crime or fraud reports, or evidence of wrongdoing, but alerts to potential instances of economic crime", UK Finance, a sector lobby group, told Agence France-Presse.
"Law enforcement may sometimes request firms keep a client relationship ongoing to support further investigations."
A Deutsche Bank statement said the transactions in question were "well known to our regulators" and added that it invested "billions of dollars to more effectively support authorities in this effort".
JPMorgan said it has employed "thousands" of employees and invested "hundreds of millions of dollars" to combat illicit activity.
"We have played a leadership role in anti-money-laundering reform that will modernise how the government and law enforcement combat money laundering, terrorism financing and other financial crimes," it said.
BLOOMBERG, AGENCE FRANCE-PRESSE
• Additional reporting by The Straits Times
