Standard Chartered and FTSE 100 rebased

Standard Chartered has hired the veteran investment banker Bill Winters as its new chief executive, drawing praise from investors even though he is widely expected to launch a multibillion-pound rights issue.

His appointment to replace Peter Sands is part of a dramatic boardroom clear-out at the emerging-markets focused bank that follows months of pressure from leading investors over its deteriorating performance. Sir John Peace, chairman, is to step down himself next year and said three non-executive directors were leaving along with its veteran head of Asia, Jaspal Bindra.

In his eight years in charge Mr Sands, a former diplomat and McKinsey consultant, helped StanChart to navigate the financial crisis better than many rivals. But its share price has almost halved since a long run of double-digit earnings growth ended in 2013. In the past year, it has issued three profit warnings, and its performance is expected to deteriorate further in annual results next week.

Mr Winters, a former JPMorgan investment banker, made no public statement about strategy. But one person familiar with his thinking said the need to raise capital to bolster its balance sheet and cover the cost of an expected hefty restructuring was the 53-year-old’s top priority.

The London-listed bank’s troubles are partly due to slowing economic growth in its key markets of the Middle East, Africa, and Asia — where it began as a colonial-era lender — leading to a rise in bad loans. Adding to its woes, StanChart has fallen foul of US regulators who have fined the bank twice in three years over sanction and control violations.

One person close to the board said 10 of the bank’s leading shareholders, including Singapore’s Temasek and Aberdeen Asset Management, had recently told Sir John they wanted Mr Sands to go quickly and that accelerated succession plans.

Shares in the bank closed up 5.4 per cent. “We think he is the right man for the job,” said Jason Napier, banking analyst at Deutsche Bank, who predicts StanChart will need to raise an extra $5bn from a rights issue.

“He has not been hired for business as usual,” said Ronit Ghose, banking analyst at Citigroup, adding that StanChart needed to boost its capital ratio from 10.7 per cent in June. “The question is how do you get to that [higher] capital number — it has to be either by shrinking the balance sheet or by raising capital.”

Based in London for two decades, Mr Winters, who on Thursday described StanChart as “a special bank”, was the number two at JPMorgan Chase before leaving in 2009. He set up Renshaw Bay, a private debt fund, but is now stepping down from its day-to-day management.

He is respected by investors and regulators, having worked on Britain’s Independent Commission on Banking chaired by Sir John Vickers, and was linked with previous roles at banks such as Barclays.

One hedge fund manager who is betting against StanChart by short selling its shares, said: “I don’t think he’s the guy for this role. He doesn’t know Asia at all.” But Mr Sands said his successor had run a global business at JPMorgan that included a significant Asian operation.

A leading internal contender to replace Sir John is Naguib Kheraj, a non-executive director at StanChart, but some say he is too similar in profile to Mr Winters and it may count against him that the two worked together at JPMorgan. “An external candidate is more likely than ever,” said one person familiar with the situation.

Mr Sands, a former McKinsey consultant, will be paid his $1.7m salary for this year and could receive up to £8m from previous share awards that have not yet vested. Mr Winters will be paid up to £6.9m, including a salary of £1.15m.

Temasek welcomed Mr Winters and his “considerable experience as well as an excellent reputation for building good teams”. Martin Gilbert, head of Aberdeen, said: “Bill Winters is an inspired choice.”

Additional reporting by John Aglionby and Emma Dunkley in London

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