Standard Chartered takes a fresh look at business units and portfolios

Private banking and wealth management to get a new boost

Private banking and wealth management is one target area where the bank wants to boost operations and the aim is to increase its $60 billion of assets under management to more than $100 billion by 2020.

The bank currently has a set of wealth management products which is primarily distributed through the retail network (70 per cent) and the other 30 per cent distributed through private bank.

“We are investing heavily in the private bank. Obviously our commercial banking clients as they become wealthy need private banking services. We are investing in technology in the wealth management platform which will also plug into our private banking and retail,” said Winters.

The bank is taking a hard look at its private equity business. Losses at Standard Chartered Private Equity (SCPE), more than doubled to $650 million in 2016 as its investments lost value and was hit by $200 million of impairments last year. The bank had announced in the beginning of last year that it is considering strategic alternatives to that business.

There are questions on private equity investing by banks as these are very capital intensive and balance sheet unfriendly. It could become more so as regulators become stricter. Standard Chartered has a relatively complicated portfolio one with private equity, real estate and mezzanine finance.

“We have got plans to realign the portfolio. We have some third party stakeholders in terms of co-investors and others who are relying on our exercise of good oversight and very focused on getting the very best economic results for ourselves and our stakeholders. That is a small business and we will migrate to a new format in a year or two,” said Winters.

The bank has already brought down the portfolio size substantially from more than $3 billion on the balance sheet three years ago to $1.8 billion today. “We will look for a right place for that business within the business or outside in the near future,” Winters said.

The bank is still facing investigations by US and UK regulators for sanctions breaches and failings in anti-money laundering policies dating back to 2012. Winters said it has made tremendous progress on tightening controls and has launched a compliance academy to train other banks.

Regulatory compliance

“We have been working hard to improve our regulatory compliance and relations with global regulators. We have some absolutely cutting edge projects and programmes in compliance. We are very active in helping our clients to deal with compliance and security related issues that are widely recognised by the authorities as one of the most proactive banks,” he said.

The bank has been facing some criticism over the slow pace of getting out of troubled assets. “We have been pretty deliberate in terms of our approach to our assets. First of all, we don’t need to deleverage as we have a very strong capital position. Regarding some of the residual concentrations that are troublesome our positions have improved substantially from where we were 15-18 months ago,” said Winters

Since 2014, the bank has made substantial improvements in asset quality issues linked to its commodity related exposures, exposures to Indian borrowers and to Chinese borrowers. “We have hit all the targets we set back then. That is not to say that we have no loan impairments. We are selling things at the right price so we don’t have to deleverage, but we have some trouble spots in the portfolios and that is being addressed on a consistent basis,” said Winters.