Winters give bank stability amid virus

Standard Chartered Plc may have many failings. At least it has a leader.
The London-based emerging markets bank run by Bill Winters hasn’t had the best of years, and the outlook, with so much exposure to virus-affected Hong Kong, is looking grim.
It does, though, have a stable team, led by a CEO about to complete five years in the job. That puts the bank in a better place than traditional rival HSBC Holdings Plc, which is undergoing a radical overhaul with 35,000 job cuts under caretaker CEO Noel Quinn.
Last week, StanChart posted full-year underlying pretax profit of $4.2 billion, slightly behind consensus forecast of $4.3 billion, and announced a $500 million buyback. That was less than $1 billion analysts had expected. The bank salved the disappointment by hinting that it will return more capital to shareholders after completing sale of its stake in Indonesia’s PT Bank Permata. There’s no share buyback in the works at HSBC.
Standard Chartered said that the coronavirus outbreak will delay its target of a 10% return on tangible equity by 2021.
Having Winters at the helm gives StanChart an edge — and not just over HSBC. Several other European banks have new or no heads. Earlier this month, Credit Suisse Group AG named a new CEO after ousting Tidjane Thiam over a spying scandal; UBS Group AG poached ING Groep NV Chief executive Ralph Hamers; Barclays Plc, according to the Financial Times, is looking for a replacement for Jes Staley, who’s preparing to retire from the bank next year amid allegations of links to offender Jeffrey Epstein.
Winters hasn’t exactly had a chummy relationship with investors. He took a pay cut after shareholders complained about his high pension allowance last year, a revolt that he initially criticised as “immature and unhelpful.” To put that painful episode behind him, the CEO will need to offer a meaningful increase in shareholder returns from last year’s 6.4%, two percentage points lower than HSBC.
As with HSBC, Hong Kong is StanChart’s single biggest market. Before the impact of last year’s anti-government protests could fade, the coronavirus has arrived to threaten economy again. The outbreak will also hurt Singapore, another key market.
All the same, if and when he leaves Winters will in all likelihood hand over a more solid franchise than he received. When he joined in June 2015, StanChart was neck deep in bad corporate loans in India and Indonesia. That problem is in the rearview mirror now. Even though the loan loss rate ticked slightly higher last year, it was just over half what it was two years ago. While asset quality pressures may rebuild because of the supply-chain disruption from the coronavirus, at least the bank’s ability to endure as an independent institution is no longer in doubt.
—Bloomberg