Standard Chartered Bank laid bare the scale of the task facing its incoming chief executive Bill Winters yesterday after profits fell by 30 per cent to $4.2bn (£2.7bn) last year.
Outgoing chief executive Peter Sands, who lost the backing of key investors after issuing three profits warnings, said he and the other executive directors would not be taking any bonuses for last year.
Across the group, total bonuses are down just 9 per cent against the 30 per cent fall in profits, which Mr Sands defended, saying that “98 per cent of our staff work outside the UK, where competition for talent is enormous”.
Standard Chartered shares rose 5 per cent on the results, gaining 49.8p to 1,024p, largely on relief that they did not include a feared rights issue. The dividend for the year was held at 86 cents.
Mr Sands admitted that 2014 had been “disappointing” and that this was “one of the more challenging sets of results which I’ve had to present”.
Revenues at the emerging markets bank were down 2 per cent at $18.2bn and bad debt provisions rose 32 per cent to £2.1bn, in contrast to most Western banks, which are now reducing their write-downs for bad loans.
The chairman, Sir John Peace, who is also quitting the bank next year, said: “There are significant factors impacting our current performance which cannot be ignored: the imperative to build capital levels across the industry; the need for ongoing investment in enhancing our systems and processes associated with conduct and compliance; and the need to change the shape of our business to fit the demands of the current economic and regulatory landscape.”
The bank outlined plans to cut its cost base by a further $1.8bn between 2015 and 2017, partly through job cuts and branch closures. It said it would target a return on equity of at least 10 per cent in the medium term, up from last year’s 7.8 per cent.
All or nothing: Parting words
Eight years of dealing with the ladies and gentlemen of the press on a regular basis has clearly taken its toll on Peter Sands, the departing chief executive of Standard Chartered.
His final conference bore all the hallmarks of a man bowed but not cowed.
“Obviously this is one of the more challenging sets of numbers which I’ve had to present,” he said of the 30 per cent fall in profits. And on the thorny subject of bankers’ pay, he went for it.
“Let’s get bonuses out of the way. The executives on the plc board will not be taking any variable compensation for 2014 in light of the disappointing performance.”
So how much was he giving up, I ventured to ask?
“We have waived our eligibility to bonuses,” he snapped. “The quantum is irrelevant.”
The conference call went strangely silent.
Subsequent inquiries suggest Mr Sands has foregone some $6m of 2014 bonuses – down from $6.56m in 2013. But he still departs on “good leaver” status, entitled to a year’s pay of $1.7m and long-term share bonuses.
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