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
Life and Style
A monstrous idea? Body transplants might no longer be science fiction
Science An Italian neurosurgeon believes so - and it's not quite as implausible as it sounds, says Steve Connor
Sport
Demba Ba (right) celebrates after Besiktas win on penalties
footballThere was no happy return to the Ataturk Stadium, where the Reds famously won Champions League
Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
arts + ents
News
Mia Freedman, editorial director of the Mamamia website, reads out a tweet she was sent.
arts + ents
News
people
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
arts + ents...begging to differ, John Walsh can't even begin to number the ways
Sport
Jose Mourinho on Sky Sports
footballEXCLUSIVE COLUMN Paul Scholes: It was not a leg-breaking tackle, as the Chelsea manager had claimed
ebooks
ebooksA special investigation by Andy McSmith
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: Telesales / Marketing Executive - B2B - OTE £25,000

£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...

SThree: Trainee Recruitment Consultant

£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Recruitment Genius: Business Control Manager

£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower