New | StanChart shares tumble on reports CEO to be replaced by end of the year
Standard Chartered shares closed down by about 1 per cent on Monday at HK$110 after British media reported that the bank was seeking to replace chief executive Peter Sands by the end of the year.
The Daily Telegraph reported that the bank’s two largest share holders, Temasek and Aberdeen Asset Management, had demanded a succession plan for Sands while the Financial Times said a headhunter had been hired to find a replacement.
A spokeswoman for the bank in Hong Kong said it was not making any announcements at present and that Sands had the full support of the board in carrying out a strategy to bring the bank back to profit growth.
Standard Chartered stunned investors in August with a 20 per cent tumble in first half pre-tax profits. Ratings agency Standard & Poor’s cut its credit rating on the bank for the first time in 20 years in response and said the resulting A-rating had a negative outlook - a signal that another downgrade could come.
The bank announced earlier this month that it would cut its global capital equities businesses as well as 4,000 jobs in its retail banking division worldwide, part of Sands’ plan to reduce costs by US$400 million this year.
Analysts expect full-year earnings per share - due to be revealed in early March - to fall 17.3 per cent versus 2013, according to Bloomberg consensus estimates. Some 25 of the 38 analysts who cover the bank rate it a hold or a sell, with 13 ranking it as a buy.
Standard Chartered was exposed to a commodities financing fraud uncovered in Qingdao last year. It sued the owner of the metals trading firm at the centre of the case.
The bank had US$175 million in impairments from China commodities in the first half of last year, and its total loan impairments stood at US$846 million, which was 16 per cent higher than the same period a year earlier.
Falling commodity prices have already triggered debt repayment woes for the banking industry.
Analysts have grown increasingly concerned about the asset quality of the lender’s loan exposure to commodity-related firms. Credit Suisse said in a recent report that Standard Chartered’s US$61 billion global commodities exposure might require additional provisioning.