By Margot Patrick and Max Colchester
LONDON-- Standard Chartered PLC said Thursday that Chief
Executive Peter Sands will step down in June and be replaced by
former J.P. Morgan Chase & Co. executive Bill Winters,
following a protracted campaign by shareholders and some executives
who had grown frustrated with the bank's leadership.
The shake-up was far-reaching: The London-based, Asia-focused
lender also said Chairman John Peace will step down in 2016 and
that three longtime board members were also resigning. They will be
replaced by two new independent directors.
While pressure has been building for months on Messrs. Peace and
Sands, the magnitude of the changes surprised analysts and some
bank executives. Investors greeted the move, sending Standard
Chartered's shares up more than 4%.
The clean out introduces the possibility of dramatic strategic
or financial change at the emerging-markets bank. Some analysts
said they expect Mr. Winters to take steps to boost the bank's
capital buffers by selling new shares, a move that Mr. Sands has
long resisted even as investors question the adequacy of the bank's
capital levels. Another possibility is accelerating Standard
Chartered's retreat from some far-flung locales where the bank
lacks much heft.
Mr. Sands, who for months said he wasn't leaving even as the
bank's share price tumbled, said it was "the right moment" to hand
over the reins to Mr. Winters. "I am delighted that a banker of
Bill's caliber will be leading the group through the next phase of
development," he said. Mr. Winters, who set up London-based
asset-management firm Renshaw Bay after leaving J.P. Morgan in
2009, called Standard Chartered "a special bank." The 53-year-old
American was co-CEO of J.P. Morgan's investment bank during a
26-year career at the U.S. lender. He will join Standard Chartered
on May 1 and start the CEO job in June.
The announcement marked an abrupt end for one of the U.K.'s
longest serving bank chief executives. During his nine-year tenure
Mr. Sands guided Standard Chartered up a wave of growth in Asian
lending markets. When a slew of British banks needed bailing during
the financial crisis the U.K. government turned to Mr. Sands as a
key adviser. However in recent years the executive's star has
waned. In 2012, the bank was fined by U.S. authorities for
violating U.S. sanctions and a year later the emerging markets
fueled growth slowed for the first time in a decade.
Despite a rising cost base and a series of profit warnings, the
bank initially held back from making drastic changes to its
business. The reluctance to change was viewed by some investors as
a sign of arrogance born out of past success. Temasek Holdings Pte.
Ltd., Standard Chartered's biggest shareholder with an 18% stake,
and Aberdeen Asset Management PLC, the second biggest shareholder
with a 7% stake, began to agitate for change. Last fall Mr. Peace
looked to refresh the bank's succession planning, according to a
person familiar with the matter.
In an effort to appease critics, Mr. Sands laid out plans in
January to shed thousands of jobs in Standard Chartered's retail
bank and shut its stock-trading business, but the plans were
regarded by many as insufficient to address the bank's broader
problems.
In recent weeks Mr. Sands was privately pressed by some Standard
Chartered executives and shareholders to resign, according to
people familiar with the matter. At the World Economic Forum in
Davos, Switzerland, last month, some clients who met with Standard
Chartered executives expressed concerns to them about whether the
bank's management was getting distracted, The Wall Street Journal
reported. By then the bank had stepped up its search for a
successor to Mr. Sands, according to a person familiar with the
matter.
The change came quickly. Mr. Winters was approached for the job
a few weeks ago, according to a person familiar with the search.
The speed of the announcement caught some big shareholders off
guard. "It's completely surprised everyone on the upside to get
someone of that quality, " said Martin Gilbert, chief executive of
Aberdeen Asset Management.
While Mr. Winters in recent years has been a CEO candidate at
other U.K. banks, he has little direct experience in Standard
Chartered's core emerging markets or in commercial or retail
lending. There were a handful of other candidates, some based in
Asia, but U.K. regulatory requirements and political scrutiny made
it very hard to lure them to a London-based role, people familiar
with the matter said.
Mr. Peace dismissed concerns about Mr. Winters's limited Asian
experience and stressed that shareholders are supportive of the
appointment. Mr. Sands said he would speak with Mr. Winters daily
to get him up to speed on the business. Later in the year both men
will travel around Asia meeting key clients and stakeholders, he
added. Mr. Winters's experience running the European and Asian
investment bank at J.P. Morgan and his strong links with the
British establishment were a plus, according to a person familiar
with the search. He served on the U.K.'s Independent Commission on
Banking, a panel of experts which played a key role in reforming
Britain's banking sector after the financial crisis.
The changes mark a victory for Temasek, the Singapore state
investment company, which had been pressing the bank for years to
make changes to its governance and appoint more independent
directors. That process was accelerated with the naming Thursday of
two new directors: Gay Huey Evans, a former Barclays and Citigroup
executive who has also worked for the U.K.'s financial regulator,
and Jasmine Whitbread, the chief executive of nonprofit
organization Save the Children International, will join the board
in April. Longtime directors Ruth Markland, Paul Skinner and Oliver
Stocken will step down in the coming months.
More bad news is likely coming for Standard Chartered when it
releases its 2014 results Tuesday. They are expected to show a rise
in bad loans from customers hit by the commodities selloff.
It is unclear whether much of the old Standard Chartered team
will remain in place after Mr. Sands's departure. Mr. Peace
declined to comment on how long Mike Rees, Standard Chartered's
deputy CEO, plans to work for the bank. Mr. Rees didn't respond to
a request for comment.
"I was never going to be here forever," Mr. Sands said
Thursday.
Write to Margot Patrick at margot.patrick@wsj.com and Max
Colchester at max.colchester@wsj.com
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