James Moore: Has Standard Chartered dug itself into a hole?


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The Independent Online

Outlook The hard hats are on at Standard Chartered. Amazing to think that people were once prepared to call this the world’s best bank, although that’s not saying much, given the state of the industry.

Persistent problems with the US authorities over money laundering, executive departures, and a run of profit warnings have put that one to bed.

But is there another stone about to drop on the head of chief executive Peter Sands?

According to Credit Suisse, there is, in the form of Standard Chartered’s exposure to commodities. Its analysts reckon the bank might need as much as $4.4bn (£2.9bn) of additional capital to cover losses on its book this year as a result of the slump in global commodity prices. And it forecasts a chunky $2.6bn provision as part of that. Just to maintain its current capital provision.

Of course Credit Suisse is forced to use some guesswork, and that $4.4bn figure is based on an adverse scenario which may not come to pass.

All the same, you’d rather hope that some of those questions had been raised by the Prudential Regulation Authority. The spectre of a commodity crunch delivering such a painful blow to Standard Chartered’s capital position is something it ought to be worrying about for a bank in a stable situation. Which, with its numerous difficulties, Standard Chartered is not.