The banking darling that fell from grace

STANDARD Chartered has registered its first annual loss in more than a quarter of a century – lurching £1.1bn into the red.

The toxic combination of the slowdown in China, freefalling commodity prices and huge restructuring costs proved too much for the emerging markets specialist. Bad loans – including those made to struggling oil and gas companies – spiralled by 87pc to £2.8bn. The giant also racked up £ 1.3bn in restructuring costs.

Standard Chartered’s long suffering investors were stunned by the scale of the losses, with shares plunging more than 10pc in early trading.

The share price recovered during the day, but still closed at its lowest level since the late 1990s – falling nearly 7pc to 406.95p.

The annual loss of £1.06bn marks a dramatic swing from a £3bn profit in 2014. It is the first time the emerging markets specialist has made an annual loss since the Asian crisis of 1989, cementing the dramatic fall from grace of another British banking giant.

Unlike most of its peers, Standard Chartered sailed through the financial crisis relatively unscathed and became a darling of the stock market.

But its focus on emerging markets in Asia which had proved its strength for so long is now proving to be its undoing as the economies throughout the region have slammed into reverse.

Chief executive Bill Winters, the American investment banker parachuted in last summer after a boardroom clear-out, said: ‘It rips at our soul every time we look at these numbers and we don’t ever want to have to stand up and tell this story again.’ But Winters dismissed fears of another crisis, which have been fuelled by concerns about the global economy and the safety of banks. This is not a banking crisis,’ he said – pointing out the firm’s ‘extremely liquid balance sheet’, and its ‘stable and improving client list’. Winters added that the bank is ‘going through a ‘very difficult transition’ from ‘rapidly booming growth’ to a ‘period of readjustment’.

This ‘readjustment’ has been enormously painful for both staff and shareholders.

The bank yesterday confirmed there will be no dividend for shareholders as it desperately tries to slash costs.

Seven thousand employees lost their jobs last year as part of a programme of 15,000 redundancies announced last November. This helped the bank generate £426m in savings last year. Standard Chartered was forced to go cap in hand to shareholders with a £3.3bn rights issue in December to shore up its finances and is trying to slash almost a third of its £7.1bn annual budget.

In an effort to show restraint 200 top executives will not receive an annual bonus. But the lender confirmed that Winters still received £1.7m for just six months work.

He has also been awarded a long term shares award worth £6m, that will only pay out in 2018 if the bank hits all its targets.

The 54 year old – a former top executive at Wall Street giant JP Morgan – was handed a controversial £6.1m ‘golden handshake’ to compensate him for bonuses he forfeited when he joined Standard Chartered.

Peter Sands, Winter’s predecessor who was ousted in June after Standard Chartered’s dramatic decline in fortunes, was paid £3.3m last year.

Despite the disastrous loss, the bonus pool was cut by just 22pc to £605m. The lender is still in trouble with US regulators after being fined £ 400m in 2012 for busting sanctions.

The UK’s Financial Conduct Authority is also investigating whether its financial crime controls are up to scratch.