Standard Chartered Takes Aim at Mature Markets
February 01 2017 - 07:17AM
Dow Jones News
By Margot Patrick in London and Julie Steinberg in Hong Kong
Standard Chartered PLC has a new market in its sights after 150
years financing trade across Asia, India and Africa: the U.S.
The London-based bank may be best known in the U.S. for
regulatory run-ins over transactions with customers in Iran and
other sanctioned countries. But its new head of corporate and
institutional banking, Simon Cooper, wants to win business from
U.S. companies looking to expand in Asia, Africa and other emerging
markets where Standard Chartered is a major operator.
The country has "many, many clients we've just never spoken to
before," Mr. Cooper said in a recent interview. Last year, he and
his management team met dozens of customers to find out how they
felt about the bank. The broader Americas region has been
"underrepresented" within Standard Chartered, Mr. Cooper said.
In October, it hired Torry Berntsen as chief executive head of
corporate and institutional banking for the Americas region, with a
mandate to hire some more people there, Mr. Cooper said.
Recent wins include helping a big American coffee chain in China
convert yuan back to dollars, and guiding a U.S. e-commerce
business into Africa.
Right now, the Americas is Standard Chartered's smallest
revenue-producer in a geographic breakdown. Loans to clients in the
Americas were around $11.5 billion at the bank at the end of 2015.
In the greater China region including Hong Kong, they were $77.7
billion.
The move to tap more mature markets--Mr. Cooper said
border-crossing European companies also represent a big
opportunity--comes as Standard Chartered is reducing risk in some
racier parts of the world. The bank lent billions of dollars to
entrepreneurs and businesses in India and Hong Kong, then paid the
price when some of the businesses teetered in the commodities
slowdown. Since the end of 2014, its commodities exposure has been
cut by one third, to $37 billion at the end of June 2016.
Mr. Cooper was hired by Chief Executive Bill Winters last April
to help get Standard Chartered back on track after years of
overexpansion. He inherited a division that had grown too far too
fast, fueled by cheap money pouring into Asia and relationships
with a handful of large but risky customers. But cutting loose big
clients has meant losing revenue too, something analysts say
Standard Chartered can ill afford to do.
Standard Chartered runs the risk of being too concentrated in
certain regions, said Chirantan Barua, a banking analyst at
Bernstein Research. Expanding the focus on clients in the U.S. and
other developed markets is "a diversification strategy that makes a
lot of sense," he said, that will enable the bank to bring
developed players to emerging markets and not just other way
around.
Mr. Cooper, 49, joined the bank after a 26-year career at larger
rival HSBC Holdings PLC. There, he gained a reputation for being
ambitious, decisive and blunt. From a start in corporate finance,
he took a traditional path for rising HSBC managers with
assignments across Asia and the Middle East. He was named a group
general manager--an elite ranking within the bank--and was CEO of
HSBC's Middle East and Korean arms before becoming head of global
commercial banking in 2013.
He was then just one rung from the top job, held since 2011 by
Stuart Gulliver. So his surprise jump to Standard Chartered was
seen as an acknowledgment of the stiff competition to replace Mr.
Gulliver when he steps down in the next year or two.
Now in a similar spot at Standard Chartered, and running its
biggest business, Mr. Cooper is seen as a potential candidate to
succeed Mr. Winters--although internal competition exists there
too.
The bank also still has a series of legal and regulatory hurdles
to get over, including a potential penalty from the U.S. for
alleged business with customers in sanctioned countries beyond an
earlier period covered by a 2012 settlement. Standard Chartered has
said it is cooperating with a probe into possible historical
violations.
The bank reports fourth-quarter earnings Feb. 24. Analysts say
it could take years for Standard Chartered to get its returns back
to acceptable levels while it cut costs and works through its
problem loans. Its stock has been buoyed, though, by investors
buying it as a proxy for commodities or as a hedge against the
pound. Most of the bank's earnings are denominated in dollars,
while its shares trade in sterling.
"We need to focus on growing revenues for this business and
improving returns for our shareholders and that's the focus for
this year," Mr. Cooper said. "But they have to be sustainable
returns. We've got to mitigate and manage the risks for both credit
and financial crime as we grow."
Write to Margot Patrick at margot.patrick@wsj.com and Julie
Steinberg at julie.steinberg@wsj.com
(END) Dow Jones Newswires
February 01, 2017 07:02 ET (12:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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