By David Wighton
LONDON--British bank executive Naguib Kheraj landed a coup in
2007 when he helped the Singaporean state investment firm Temasek
Holdings Pte. Ltd. invest $2 billion in Barclays PLC. But the deal
ended up costing Temasek hundreds of millions of dollars and now,
years later, it may come back to haunt Mr. Kheraj.
The 49-year-old banker is tipped as a strong candidate to take
over as chairman of Standard Chartered PLC, should some
shareholders get their way and nudge out the current leadership.
But standing in his way is Temasek, Standard Chartered's biggest
shareholder, which is still smarting over the Barclays debacle,
according to people familiar with the matter.
Standard Chartered's profits are slumping and its share price
has halved from a peak in 2013. The Asia-focused bank is targeting
$400 million in cost cuts this year. It has slashed 2,000
retail-banking staff in recent months and expects to reduce head
count by as much again in 2015. Last week, the bank said it is
shutting its stock trading and underwriting businesses.
Some investors are pressing for a change in management, piling
pressure on Chief Executive Peter Sands and Chairman John Peace.
For some investors and analysts, Mr. Kheraj, formerly finance
director at Barclays and a nonexecutive director on Standard
Chartered's board since January 2014, is seen as a leading
contender to take over from Mr. Peace.
"He obviously has the skill and experience from his Barclays
days," said Sandy Chen, a banking analyst at Cenkos.
Mr. Kheraj is eager to be appointed chairman, according to
people familiar with his thinking, and he has the support of
Aberdeen Asset Management, the bank's second-biggest shareholder,
according to people familiar with Aberdeen's view.
But there is a problem: Temasek, with an 18% stake.
Mr. Kheraj was working as a consultant to Barclays when he
helped negotiate Temasek's investment. The deal didn't turn out as
planned--Temasek recorded an estimated $850 million loss on its
Barclays shares when it sold them in 2009, according to a Wall
Street Journal report. The Singaporeans partly blame Mr. Kheraj and
would oppose him getting the Standard Chartered chairmanship, the
people familiar with Temasek's thinking said.
Both Mr. Kheraj and a spokesperson for Standard Chartered
declined to comment for this article.
A top 10 shareholder who is backing Mr. Kheraj for chairman said
Temasek's opposition would be "a big hurdle."
"If Temasek didn't give their support he couldn't be a
candidate," the shareholder said.
The dilemma highlights the bank's broader succession-planning
problem. Peter Sands, chief executive since 2006, was highly
regarded for the way he steered Standard Chartered through the
financial crisis. But the recent downturn in the bank's fortunes
has cast management in a different light, and the bench looks thin.
The bank's former finance director, longtime executive Richard
Meddings, quit last year, and it announced the departure of its
chief risk officer and chief information officer last week.
Since the financial crisis, British regulators have required
that chairmen of big banks have extensive banking experience. But
there are few executives whose reputations haven't been damaged in
some way by the crisis and want to take a role that is now much
more onerous.
According to one large shareholder, Mr. Kheraj is the only
realistic chairman candidate on Standard Chartered's board. "He
ticks a lot of the boxes and it is not easy to find bank chairmen
these days." the shareholder said.
Mr. Kheraj was born in London and studied economics at Cambridge
University. He is an Ismaili Muslim and a close adviser to the Aga
Khan, leader of the Ismaili religious group. He is also on the
investment committee of the Wellcome Trust, a health research
charity. His sister, Nilufer von Bismarck, is a highflying London
lawyer who advised Standard Chartered on a rights issue in
2010.
Mr. Kheraj spent 10 years at Barclays, holding senior jobs in
investment banking, and wealth- and fund- management. He was
appointed finance director in 2004 at the age of 38 and was a close
ally of former Barclays CEO Bob Diamond. He stepped down in 2007,
saying he wanted new challenges outside the bank, but stayed on as
a consultant to help with an unsuccessful bid for ABN Amro Group
NV, which was to be funded partly by the Temasek investment. He
then spent 18 months as chief executive of Cazenove, the British
broker then being taken over by J.P. Morgan Chase & Co.
Former colleagues say Mr. Kheraj is a hard worker. "He has a
remarkably fine intellect and works incredibly hard. The joke used
to be that his would often be the last email one received at night.
Then his would also be the first one received the following morning
at six o'clock," said Marcus Agius, the former chairman of
Barclays.
In 2011, Mr. Kheraj was appointed chief executive of the
international arm of advisory firm Lazard Ltd. but quit after just
six weeks. Lazard declined to comment. People familiar with the
events said Mr. Kheraj had believed it would be a management role,
whereas his new employers expected him to bring in new business.
Mr. Kheraj said in a statement at the time that he couldn't balance
his new role at Lazard with his charitable work.
Mr. Kheraj has previously made pitches for some of the top jobs
in U.K. banking, including chief executive of Lloyds Banking Group
PLC and Royal Bank of Scotland Group PLC, according to people
familiar with the matter.
After failing to get these jobs, he hired an executive coach to
get feedback and sought advice from senior executives who knew him
well, according to one of these people. The advice was that he
should seek a chairman role but that he first needed experience as
a nonexecutive director.
One person close to the Standard Chartered board said Mr. Kheraj
has been careful to cultivate other directors and has endorsed the
bank's current strategy, including its approach to cost
cutting.
Write to David Wighton at david.wighton@wsj.com
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