This development has been commended.
Standard Chartered announced recently that Bill Winters will succeed Peter Sands, who will step down from the board in June 2015, as Group CEO.
According to a research note from Nomura, Winter as the new CEO is a great hire. In addition, Sir John Peace, Chairman, will step down during 2016 and Jaspal Bindra, Group Executive Director will also leave.
Mr. Winters joins Standard Chartered with a strong background in the financial sector. He has 28 years of experience in the investment industry, including 26 years at JP Morgan. He moved to London in 1992 as Head of European Fixed Income and, in 2004, was promoted to Co-CEO of JPMorgan Investment Bank.
Here's more from Nomura:
He played a key role in managing JP Morgan Investment Bank through the 2008 financial crisis, including the acquisition and management of Bear Stearns.
He was a member of the Independent Commission on Banking in the UK, which submitted its report to the
Chancellor in September 2011. He is a member of the Board of the International Rescue Committee and the Institute of International Finance where he co-chairs the Committee on Effective Regulation.
No immediate change of plans likely - With 2016E ROTE at c8.2% on an 11.5% CET1 requirement, it seems inevitable that a material restructuring of the group is required.
The new management team will have to get profitability back above cost of equity and push for future growth in STAN’s footprint, as the wholesale banking-led growth strategy no long works. It also needs to address the capital shortfall that market currently perceives.
Given new CEO does not start until June 2015, he will likely have completed a full review of the business by say September 2015. Growth plans from the group are likely to be on hold and the current management team is likely to drive risk-weighted asset (RWA) optimisation in the face of regulatory / migration pressures on RWA, which should buy time for strategic thinking.
This also means that we see material downside risk on earnings in the near term. We are already c3% below consensus EPS expectations and still see downside risk to our earnings estimates.
We hope that new management will raise equity to break the vicious cycle between lack of capital leading to revenue and profitability pressure. After that, RWA reduction should help create room for future growth and dividends.
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