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


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.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss