Investors welcome news that chief executive Peter Sands will leave in June, followed by chairman Sir John Peace next year.
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| Peter Sands is to stand down as chief executive of Standard Chartered in June, after 13 years at the bank. |
Peter Sands, who has felt the heat from shareholders for months amid Standard Chartered's slumping share price, will leave the bank in June.
His departure comes just months after he told investors in Asia in November that he was not going anywhere.
Bill Winters, the former head of JPMorgan's investment bank, will join in May, and take charge of the sprawling emerging markets focused bank when Mr Sands departs.
Sir John Peace, its chairman who has also been criticised, will also stand down, albeit in 2016 to allow time for Mr Winters to settle in.
The bank's three longest serving non-executive directors will also leave, while Jaspal Bindra, the head of the bank's Asian operations, will step down from the board.
The dramatic news comes less than a month after The Sunday Telegraph revealed that the bank's two largest investors - Temasek and Aberdeen Asset Management - had told Sir John that a plan to replace Mr Sands must be enacted by the end of this year.
"Today's clearly an important day for the bank," said Sir John, adding that he believes Mr Winters "will have a fresh perspective" on the challenges and "considerable opportunities" Standard Chartered faces.
"Bill has enormous qualities in terms of banking experience and knowledge," said the outgoing chairman, when questioned as to Mr Winters' apparent lack of direct Asian experience. His experience "makes him one of the leading bankers in the world today," he continued, saying that the former JP Morgan director has "extensive knowledge" of Standard Chartered's key market places.
"But at the end of the day, it's not just about an individual, it's about the team," he went on.
Sir John attempted to dress up the changes as part of a "multi year refresh of the board" which he began in 2011. But in reality, it follows significant pressure from investors.
It is understood that head hunter Egon Zehnder began desktop research into possible replacements for Mr Sands as part of routine succession planning discussions that all boards engage in.
However that planning was stepped up a gear after Christmas, following heightened shareholder dissent, with proper conversations with possible successors, including Mr Winters, believed to have begun approximately a month ago.
Mr Sands and Sir John have been under immense shareholder pressure with the bank's profits dropping in 2013 following a decade of unbroken profit growth.
It is expected that profits will again have fallen in 2014. Those results are due to be announced next Wednesday, March 4.
The changing of the guard was immediately welcomed by investors. "Bill Winters is a great choice of CEO for a great bank," said Martin Gilbert, chief executive of Aberdeen.
Temasek, which has a 17.7pc stake in the bank, said in a statement that Mr Winters "brings with him considerable experience as well as an excellent reputation for building good teams."
However it warned that the board refresh must not stop at today's series of announcements: "This on-going process for board renewal must continue as the requirements and challenges facing the banking and financial sector across the world have become much more complex and onerous."
Shares rose as much as 3pc on Thursday morning in early trading, with the rise narrowing slightly to approximately 1pc by mid-morning.
But the bank's shares have fallen 30pc since the start of 2014 as it has battled on a number of fronts, particularly its troubled Korean business, as it copes with slowing growth across parts of Asia, where it has significant exposure.
The bank was also last year hit by new fines from US authorities over controls related to money laundering.
Mr Bindra drew extra controversy following the fine when he said the banks were being "treated like a criminal" by US authorities.
Non-executive directors Ruth Markland, Paul Skinner and Oliver Stocken will leave this year. Two new non-executive directors - City grandee Gay Huey Evans and Save the Chidren International boss Jasmine Whitbread - will join the board in their place.
The bank's board will be shrunk to 14 people over time, from its current 16.
"These sweeping board changes will clear the way for Winters to lead the major changes that Standard Chartered needs," said Sandy Chen of Cenkos Securities.
"With the share price having about halved since its March 2013 peak, the stock market was looking for a fresh start,” said Citigroup's Ronit Ghose.
“With the appointment of a highly regarded new chief executive officer, and other senior changes ahead, investors can begin looking ahead to a material recovery opportunity,” he continued.
Sir John praised Mr Sands who he said had delivered a "real achievement" in ensuring the bank remain consistently profitable for eight years until 2013.
"We've returned some $12bn to shareholders [during that time], and I think that's a real testament to Peter's leadership."
Speaking of his impending departure, Mr Sands said that while the "last few years have been somewhat tougher," it had been a "wonderful place" to work for the past 13 years. Mr Sands was first chief financial officer, before taking over as chief executive in November 2006.
Asked if there was anything he wished he had done differently, Mr Sands said: "When you've been working in an institution for 13 years of course you can find a list of things you'd wish you'd done differently.
"But I do believe that now is the right time, and it's also the right person to hand it to. I'm absolutely convinced in Bill we have found the right person."
The outgoing chairman refused to answer questions about whether deputy chief executive Mike Rees will follow Mr Sands out the door, branding a question about whether or not he had discussed Mr Rees' future with Mr Winters as "daft."
Questioned as to whether there would need to be a rights issue alongside next week's 2014 full-year results, Sir John said pointedly: "You must wait!"
However it is thought that if a capital raise was necessary, the board's fiduciary duties to shareholders would require it to have been announced already.
Deutsche analyst Jason Napier, commenting on the board changes, said: "We don't think - though we could be wrong - that FY14 results will be the cleanout that the market (and we) believe the firm needs. With Sands still at the helm, questions around strategy and outlook are likely to be deferred to his successor."
The bank said Mr Winters will be paid a salary of £1.15m, as well a share allowance of the same amount, and be eligible for a bonus worth 200pc his fixed pay.
Mr Sands will receive his current pay until the end of the year, and as a "good leaver", unvested bonuses will also be realised over the coming years.
The Telegraph
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