StanChart turns to JP Morgan alumnus after mass boardroom clearout

Ex JP Morgan i-banking head Bill Winters is to replace Peter Sands as CEO of Standard Chartered. Chairman John Peace and three veteran NEDs are also out.

by Andrew Saunders
Last Updated: 24 Sep 2015

Peter Sands, StanChart's CEO, plus chairman John Peace and three senior non-exec directors are to stand down. Ex JP Morgan investment bank boss Bill Winters will take over from Sands in June.

Winters  left JPM back in 2009 and came over to Blighty, where he bagged himself a seat on the influential Vickers banking commission. He's been looking for a big new job, and now he's found one, turning round Standard Chartered's flagging fortunes.

Chairman John Peace is also stepping down, as are its Asia head and three of the bank’s longest serving non-executive directors. Crikey! Will the last one out of the boardroom please switch off the lights?

What went wrong? Well bank boss bombshells are hardly unusual these days, as barely a week passes without some new tale of market rigging or mis-selling breaking cover. HSBCs tax avoidance troubles being the latest example, of course.

But unlike most such scandals, StanChart’s troubles are rooted less in dodgy-dealing than in old-fashioned under-performance. In the past two years its shares have almost halved in value, and profits are waning. In 2013 pre-tax profits slipped by over $500m to $6.96bn, and today’s dramatic exodus rather suggests that its 2014 profits - out next week - will probably be worse still.  Regulatory costs are rising - it was hit by a punitive $667m fine in America over allegations of money laundering - the bonds boom is over and lending money in Standard Chartered’s core Asian markets is not quite the lucrative business it once was, either.

The bank's big shareholders including Temasek and Aberdeen Asset Management have been agitating for change, and they can hardly say now that they haven’t got it. Chairman Peace will step down next year, and Asia chief exec Jaspal Bindra is also out. As are senior independent director Ruth Markland and two other non-execs, Oliver Stocken and Paul Skinner. The markets delivered a resounding cheer on the news, as shares rose almost 20% this morning.

Winters - who left JP Morgan after falling out with legendary boss Jamie Dimon - will be paid a base salary of £1.15m. He has been widely touted as a likely boss for one of the British banks, although some are surprised that it’s turned out to be StanChart as he has little experience of doing business in Asia. As a ‘good leaver’ the departing Sands will receive full pay until the end of the year and his unvested bonuses intact, too. You can read our 2012 profile of Peter Sands in better times here.

As students of corporate governance will know, so-called ‘board refreshment’ is all the rage just now (no we don’t think they are talking about fancier tea and biscuits either).  But all the same, this is the sort of full-on reshuffle we are more used to seeing in the government rather than the boardroom.  

So in contrast to so many of its rivals, having survived the crash relatively unscathed, it’s the recovery that has done for Standard Chartered. And as the fate of Sands et al demonstrates, the consequences of failure are pretty similar in either case.


Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today