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STANDARD CHARTERED’S REGIONAL CEO SUNIL KAUSHAL HAS TRANSFORMED THE BANK INTO A REGIONAL POWERHOUSE
IT WAS IN 2015, WHEN BANKS IN THE REGION attempted to weather a slowdown in the global economy that Standard Chartered’s Regional Management Team for Africa and Middle East led by Sunil Kaushal decided “securing the foundations” was the need of the hour. “There were a lot of questions around our capital levels and whether our portfolio was of the right quality and adequately provided. And we needed to address that,” he says.
As Standard Chartered consolidated its operations across the world to deliver a cost efficiency program of USD 2.9bn by 2018, Kaushal was promoted to the top job in the region in July the same year. A thirty-year veteran of the industry, he is now one of the bank’s four global heads, overseeing all of Africa and the Middle East including Pakistan, and responsible for leading a remarkable turnaround in the emerging market lender’s operations in the region.
“When we look back over the last couple years, Standard Chartered is a very different bank now in terms of the overall risk profile. The quality of our portfolio, capital levels and liquidity are now very strong, and there and there’s a strong foundation in the conduct, compliance and control culture, where previously these urgent issues were bogging down the bank. It’s a big change,” he says. Standard Chartered’s success story is evident in its figures: The bank posted $3.0bn of profit before tax, a 175 percent increase from 2016 and restored issuing dividends first suspended in 2015 when it posted its first annual loss in a quarter century. The Africa and Middle East region, of which the UAE is a part, posted profits before tax of $642 million, which represent a 49 percent jump from the previous year. Since 2015, the year when Kaushal was appointed, Standard Chartered’s profits in the Africa and Middle East region have grown by over 325 percent.
The turnaround is the result of a “laser sharp focus on managing the cost base and making room for investments”. Those investments have doubled since 2014, according to Kaushal, and have prepared the bank to benefit from encouraging structural growth trends in the region: a growing young population, and massive infrastructure development.
“This is very important,” says Kaushal. “When oil was at $110, there was a lot of liquidity sloshing with local banks which were able to satisfy investment demands in the local economy. But when oil prices crashed, the demand for capital continued,” he says. Unable to tap into local banks, that demand looked to the debt-capital markets to be satisfied. GCC governments raised $38.9 billion in debt capital in 2016; a figure that was surpassed with $57.4 billion in issuances in just the first half of 2017.
“It’s an outrageous amount of money. Instead of having local banks going out into the international markets to raise funds and finance projects, why not have international banks themselves participate locally?” he says. Standard Chartered relied on that very phenomenon in a development that has “paid off very well, says Kaushal. “Through catering to sovereign funds, Tier 1 banks and larger corporates, our share and profits among all international banks in the region has been one of the highest.”
The region is going through a struc- tural change, according to Kaushal. “Generally, in the short term, reforms might slow down activity. But if you take the longer term, when you’re a bank such as us that has been around for over 150 years, you’ll see that these reforms are going to make the economy more sustainable. A broader revenue base, with funding on commercial terms in projects that are viable and participation from both governments and the private sector are all encouraging signs for growth. And you have to see, we’re only just beginning to scratch the surface of private sector participation in the economy,” says Kaushal.
Still, Kaushal remains modest when discussing the bank’s improved fortunes, asserting that the bank has done well, instead of tremendously well, and is best poised to do better. “We are seeing a return of topline growth. But we’re not looking for runaway growth. We have to be realistic,” he says. “Banks are a mirror image of the underlying economies, and the economies are growing just upwards of one percent.”
Kaushal’s attitude espouses being reverse averse and eschews brash from brash optimism, but it also belies an enthusiasm for a new digital world and future where inclusiveness isn’t binary that could almost see him being described as a millennial at heart. That he prefers “experiences over shopping,” parellels how he has trouble hiding his enthusiasm when speaking about Standard Chartered’s first fully digital bank in Cote D’Ivoire in Africa.
This low-cost project, he says, will soon help Standard Charter elsewhere. “We will be able to roll out across the Middle East and Africa soon,” he says. “It is a very exciting proposition.”