STANCHART RISKS REIGNITING BANK BONUS ROW

The emerging markets bank will pay around £715m in bonuses despite a disappointing 2014, Sky News understands.

Liverpool FC sponsor Standard Chartered is paying £715 in bonuses

The emerging markets bank Standard Chartered will risk reigniting a row over City bonuses this week when it reveals that it is cutting bonuses by a smaller percentage than its decline in profits.

Sky News understands that the lender, which announced a boardroom clearout last week, will say on Wednesday that it is shrinking its bonus pool by approximately 9% from last year's $1.208bn (£786m), according to insiders.

That would mean Standard Chartered's bonus pool for 2014 will be in the region of £715m, they said.

However, the consensus among City analysts is for annual pre-tax profits to have slumped by as much as 20%, which one source acknowledged would leave Standard Chartered exposed to criticism that it is rewarding "payment for failure".

A person close to the company pointed out that Peter Sands, the bank's chief executive, had last year cut bonuses by 15% while profits had fallen by 11%.

The source also said that Standard Chartered paid out more in shareholder dividends than it did in staff bonuses, highlighting a contrast with banks including Barclays, which reports its full-year results on Tuesday.

Nevertheless, the remuneration figures may stoke criticism of Mr Sands even as he prepares to leave the bank, which is the shirt sponsor of Liverpool FC.

That will be reinforced when Barclays says that bonuses have fallen from close to £2.4bn to less than £2bn despite an increase in profits.

Last week, Sky News revealed that Standard Chartered had recruited Bill Winters, a former JP Morgan executive, to replace Mr Sands, which was later confirmed by the bank.

The company also said that Sir John Peace, its chairman, would also step down, alongside some other executive and non-executive directors.

Standard Chartered, which recently announced the sale of its consumer finance operations in Hong Kong, has endured a torrid couple of years.

US authorities recently said they were extending their scrutiny of the bank until 2017 as part of a deferred prosecution agreement.

In 2012, Standard Chartered struck a deal with regulators that saw it pay a $667m fine for violating sanctions requirements, and was forced to pay a further $300m in August after failing to make sufficient improvements to its systems and controls.

The management changes were welcomed by leading shareholders including Temasek, the Singaporean state fund, and Aberdeen Asset Management, the fund management group which is heavily exposed to emerging markets.

Standard Chartered, which has seen shares fall by more than 22% during the last year, has shaken confidence among investors after a string of profit warnings, regulatory bust-ups and management changes.

The bank declined to comment.

Sky News