Peter Sands, the chief executive of Standard Chartered, came out fighting against accusations by a US regulator that the British bank conspired with Iranian clients to move $250bn (£160bn) around the financial system for terrorists and "drug kingpins" as he attempted to repair the bank's battered reputation.

Apologising for the first time for some breaches of US sanctions, Sands on Wednesday insisted the culture at Standard Chartered did not need to change even though the New York state department of financial services (DFS) has accused the bank's head of risk of criticising "fucking Americans" for banning trade with Iran. The head of risk at the time, October 2006, was Richard Meddings, who is now Standard Chartered's finance director.

Sands said the accusations by the New York regulator, led by Benjamin Lawsky, contained "factual inaccuracies" and would be contested at a hearing on 15 August.

The Bank of England's governor, Sir Mervyn King, appeared to lend his support to Standard Chartered. "I think that all the UK authorities would ask is that the various regulatory bodies that are investigating a particular case try to work together and refrain from making too many public statements until the investigation is completed. That seems to me to be the appropriate time to make clear what the judgment is and what the punishment is," said King.

The London mayor, Boris Johnson, in his column in the Spectator magazine, asked: "What is all this stuff about Standard Chartered? This British bank has generally enjoyed a high reputation for probity (as these places go) until yesterday, when some New York regulator apparently denounced Standard as a 'rogue institution.' "

Standard Chartered shares rose 7% to £13.50 – still £2.50 down on their price before the surprise announcement by the DFS as London markets were closing on Monday triggered a 20% slide.

"It clearly has been very damaging. It would be unrealistic to pretend otherwise," said Sands. "We are going to have to work hard to restore the damage."

The City is concerned that the damning accusations, which cover the period from 2001 to 2007, could force out Sands or Meddings – both highly regarded – or lead to the bank being stripped of its licence in New York. Sands insisted there were no grounds for the US regulator to revoke the banking licence.

He conceded that $14m of transactions – fewer than 300 out of 150m scrutinised – had broken American rules known as U-turns, which were transactions that US authorities allowed to take place as long as the money did not end up in Iranian banks. "That is clearly wrong and we are sorry those mistakes were made," said Sands, who cut short his holiday after the publication of Lawsky's 27 pages of allegations.

Sands said he did not recognise the $250bn figure announced by the regulator, nor the 60,000 transactions Lawsky accused the bank of hiding. "There was no systematic attempt to circumvent sanctions," he said.

He insisted that the remarks about "fucking Americans" were not accurate. Meddings, who is not named directly in the report, is said to have made the remarks after being warned by the bank's then chief executive for America about the risks the bank was running in dealing with Iran.

Sands defended the bank's culture – which only last week was being touted as differentiating Standard Chartered from rivals such as HSBC and Barclays, which, respectively, have been hit by money laundering and Libor scandals. "I don't think there is anything wrong with the culture at Standard Chartered … We are about trying to do the right thing and run a good bank well," he said.

The bank was caught on the back foot by the regulator, despite disclosing in annual reports since 2010 that it was in discussions with a number of US bodies over breaches of sanctions.

Sands said there had been no advance warning from Lawsky and that the bank believed it was in co-ordinated discussions with all the US regulators. "We were surprised in the manner of the announcement and that it was done without giving us any notice," he said.

There were reports on Wednesday that officials at the US treasury and Federal Reserve were angry at the decision by Lawsky to go it alone with his allegations.

King made comparisons with the Libor fine against Barclays, where there was a co-ordinated response by a number of regulators. In Standard Chartered's case, King said, "one regulator, but not the others, has gone public while the investigation is still going on".