Jeremy Warner: A standard-bearer for Britain’s banks. Pity they didn’t follow it

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The Independent Online

Outlook: Is Standard Chartered the only solvent bank left in Britain? At a recent conference, Stephen Green, the chairman of HSBC, was introduced by Tony Blair as about the only banker left who dared show his face in public during daylight hours. I'm not sure that after this week's results and accompanying rights issue, that even the measured Mr Green still counts as the acceptable face of banking.

But one bank that very definitely does is Standard Chartered. Its chief executive, Peter Sands, has become the pin-up boy of the sector, and with good reason. Profits and dividends for last year are up, with the bank having apparently made a stonking start to 2009. What's Standard Chartered got that others haven't?

It obviously helps to have no exposure whatsoever to the over-leveraged markets of the West. Standard Chartered is an emerging-markets bank focused entirely on Asia, Africa and the Middle East. Yet it is not just the luck of geography that has saved Standard Chartered. Oddly for a modern bank, it never allowed itself to forget the basic principles of banking, and, surprise, these have stood it in rather good stead.

Since I cannot explain it any better myself, I'll let Mr Sands speak for himself. "At Standard Chartered," he says, "we do not pretend to have foreseen the crisis. We knew and said there was too much leverage and that risks were being underpriced. We discounted the 'decoupling' argument. We eschewed most of the more exotic aspects of banking. We never took liquidity for granted. Yet even so, we were surprised by the pace and ferocity of events." In any case, Standard Chartered has been running the sort of deeply conservative and ultra-safe business model that would leave even the bank-hating Mervyn King, Governor of the Bank of England, lost in admiration. What a pity our domestic banking industry didn't behave in the same way.

Assets to deposits are an industry-busting 75 per cent, which means that at all times Standard Chartered is a big net lender to the rest of the banking system. Liquidity is deliberately kept at elevated levels, as is the capital buffer. Just as important, the bank has developed a customer-focused culture, which stands in marked contrast to the "transactional"-based approach of many competitors.

Mr Sands is now reaping the benefits, with record inflows as depositors chase perceived safe havens. He's even able to pay cash bonuses to his employees. Standard Chartered is trusted in a way that others are not.

Export-dependent emerging markets are being buffeted by the global downturn almost as badly as the developed West. Yet for them, the recession should prove shallower and shorter. There's no structural problem of excess leverage. Asia learned its lesson on that score during the emerging markets crisis of the late 1990s. What's more, the growth potential of these markets remains much bigger.

There are very few banks the present crisis hasn't yet floored. Mr Sands aims to remain one of them, but he's by no means complacent. Like other bankers, he's given up trying to predict the future. Yet he's plainly hit on the right kind of approach. As he puts the finishing touches to his tome on how to reform financial regulation, Adair Turner, chairman of the Financial Services Authority, might want to use Standard Chartered as a template. But then he scarcely needs to do much research. One of his jobs before joining the FSA last September was as a non-executive director of this model bank.