Bill Winters says bank has made mistakes in the past and will 'review all aspects of capital strength'
Standard Chartered's new chief executive has said the bank must bolster
its finances after years of disappointing performance in which the company
"made mistakes".
Bill Winters, on his
first day in charge of the bank, said the bank would be "reviewing all
aspects of our capital strength" in the coming months.
His comments, made in a letter sent to the bank's 91,000 staff, suggest
that Standard Chartered may cut its dividend, or raise capital via a rights issue.
The bank enjoyed a decade of unbroken profit growth until 2013, but has
seen annual profits decline and its share price fall heavily in the last two
years.
Shareholder pressure forced the bank's longtime chief executive Peter
Sands out earlier this year, following a report in The Telegraph. Chairman Sir John
Peace will follow him out of the door next year, and several other board
members are also in the process of departing.
Mr Winters, a former head of JPMorgan's investment bank, is expected to
speed up a cost-cutting drive and cast a fresh set of eyes on Standard
Chartered's business, which is largely focused in Asia, the Middle East and
Africa.
Some analysts and investors believe the bank will have to raise
billions in a rights issue, although Mr Sands repeatedly insisted this was not
necessary.
"After a long period of strong growth, the past several years have
been challenging for all of you. We have made mistakes and our performance has
suffered," Mr Winters told staff.
"We need to reinforce our foundations; streamline our business;
strengthen our financial position; and re-orient the Bank for better returns on
our capital. Only then will we be positioned for longer-term growth.
"Our capital strength is a key priority. Capital strength is a
competitive advantage, especially in tough economic times. We are reviewing all
aspects of our capital strength as part of our broader business review."
Standard Chartered shares rose 4pc on Wednesday and have now risen by
13pc since Mr Winters' appointment was announced in late February.
Part of the share price movement is likely to have been down to
unconfirmed reports suggesting George Osborne will raise the possibility of relief on the bank levy in Wednesday
evening's Mansion House speech.
One of Mr Sands' last significant acts as chief was to announce a new round of cost cuts, which will include
thousands of job losses, in an attempt to improve the
bank's capital position.
However, many expect Mr Winters to make more radical and faster
changes.
"We will have to cut out waste and excess wherever we find it. We
can make better decisions, more quickly and more safely if we streamline our
organisation," he said.
"Let’s work together to spot the complexity that slows us down and
blunts our edge. Complexity is also expensive and can sometimes have an impact
on decision-making."
Mr Winters said he would announce more changes, including to the bank's
leadership structure, this year.
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