The View | New Standard Chartered CEO faces tough choices in fixing the bank
Incoming StanChart chief faces difficult choices in turning the business around before its major shareholder loses patience and decides to sell
When you don't know where you are going, all roads lead there. That is the strategic and management dilemma that incoming chief executive Bill Winters confronts as he sorts the problems that face Standard Chartered.
The challenge may require general management rather than banking and financial skills, given the troubles Standard Chartered has suffered on numerous business fronts. Changing regulator demands and shifting markets can leave outcomes largely out of the control of a bank chief these days. Earlier this year, its previous chief executive, Peter Sands, closed global equities business and cut 4,000 jobs in retail banking.
Winters must make sense and constitute a cohesive group of businesses in the wake of restructuring, divestment and lay-off decisions made by Sands. This includes being one of the first global banks to exit equity capital markets completely by dismantling its stockbroking, equity research and equity listing desks worldwide.
The bank also shed retail banking jobs to pivot towards high-net-worth private banking. In 2012, Standard Chartered spent HK$1 billion to set up a Greater China private banking hub in Hong Kong's Central district by taking over and redesigning the Forum in Exchange Square. Focusing on new, wealthy clients in southern China sounds logical, but it remains a very competitive business.
Shedding assets and divisions depresses overall earnings until the remaining businesses can turn around or start realising their potential. And that's assuming that management chose the right businesses and people to keep. It is not an impossible task as James Gorman, the chairman and chief executive of Morgan Stanley, was a former McKinsey partner who proved even a non-banker can transform a financial institution.
However, Standard Chartered appears to have lost sight of its core values in its rush for profits and reorganisation. The result is a disconnect between its vision and its distribution channels where customers have become marginalised. Becoming relevant to customers' businesses and lives and ultimately society is only possible if Winters begins listening to customers rather than spreadsheet models.