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Standard Chartered steps up the hunt for Peter Sands' successor

The headhunter Egon Zehnder has been hired

Jim Armitage
Tuesday 27 January 2015 02:27 GMT
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News of Zehnder’s appointment triggered yet more uncertainty about the company yesterday, leaving its shares falling and investors expressing concern about future strategy
News of Zehnder’s appointment triggered yet more uncertainty about the company yesterday, leaving its shares falling and investors expressing concern about future strategy

Standard Chartered, the embattled FTSE 100 emerging markets bank, could declare succession plans as soon as next month after growing pressure for its chief executive to be replaced, it emerged yesterday.

The headhunter Egon Zehnder has been hired to hunt for a successor to chief executive Peter Sands, who has presided over a massive fall in the bank’s share price amid numerous profits warnings. News of Zehnder’s appointment triggered yet more uncertainty about the company yesterday, leaving its shares falling and investors expressing concern about future strategy.

Analysts at Berenberg bank fretted about the paucity of people capable of running such an unusually structured bank, with such unique problems. The company is heavily exposed to slowing emerging markets, has made several poor lending decisions and faces renewed scrutiny from US regulators for allegedly breaking sanctions related to Iran. Meanwhile, some analysts are predicting that Standard Chartered may have to raise funds to shore up its capital position. “There is a lack of suitable replacements that would meet the requirements in terms of knowledge, experience and regulatory approval,” said Berenberg.

Observers also pointed out that the prospect of a new chief executive being in place by the end of the year casts doubt on whether Mr Sands’ existing turnaround strategy will be implemented.

News of Zehnder’s appointment came after a torrid weekend for the bank, with reports saying its two biggest shareholders – Aberdeen Asset Management and the Singaporean investment group Temasek – had demanded that Mr Sands be replaced. The bank’s shares have halved since 2013, although Aberdeen has been buying them up in small chunks.

Standard Chartered would not comment beyond an earlier statement which said: “As we have said before, Peter and the management team are focused on executing the group’s refreshed strategy, delivering growth, cost savings and shareholders returns, and have the full support of the board in achieving this.

“The group is clearly aware of its disclosure obligations in respect of executive directors, and we are not making any announcements.”

Standard Chartered has lent $61bn to the oil and commodities sector, which is being hit hard by the massive falls in raw materials prices. It is also exposed to the sharp fall in the trading of bonds and faces potential heavy losses from clients in emerging markets if the US increases interest rates later this year.

It is the second major banking appointment that Egon Zehnder has been commissioned to make in recent months. It is currently seeking a new chairman for Royal Bank of Scotland.

After Mr Sands has been replaced, it is likely that Standard Chartered will seek a new chairman to take over from Sir John Peace, who has been criticised for failing quickly to deal with the succession problem, and for being chairman of both the bank and the fashion house Burberry.

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