StanChart may claw back senior staff bonus

Mr Winters faces a tough slog trying to restore revenue growth at StanChart
Mr Winters faces a tough slog trying to restore revenue growth at StanChart.

It reports first annual loss since 1989 as costs of restructuring bite

LONDON • Standard Chartered could claw back bonuses from up to 150 senior staff after slumping to its first annual loss since 1989, as hefty restructuring costs and weak commodity prices took their toll on the emerging markets-focused lender.

The bank fell to a headline pre-tax loss of US$1.5 billion (S$2 billion) after accounting for costs from redundancies and impairments on bad loans.

Underlying profit plunged 84 per cent to US$800 million, missing analysts' average estimate of US$899 million, according to Thomson Reuters data.

Chief executive Bill Winters yesterday said the bank had launched accountability reviews which could lead to it taking back payments made to some senior executives if they are found at fault for the lender's soaring bad loans book.

"(The bank's) executive directors have already paid a price for our underperformance," Mr Winters told a conference call, referring to a decision not to award bonuses to executive directors this year and the expiry at zero value of a 2013 performance-linked incentive programme.

Reviews into whether individuals breached compliance or risk-related rules that led to the bank's underperformance could lead to further clawbacks of bonuses paid out in the past, Mr Winters said.

A spokesman for the bank declined to comment on the identities of individuals who may be subject to the clawbacks, but said the reviews covered around 150 employees, current and former.

The surprise annual loss shows the scale of the task facing Mr Winters as he attempts to restore revenue growth and repair a bank's balance sheet riddled with bad loans made under previous CEO Peter Sands' expansion-oriented regime.

A former JPMorgan investment banker, Mr Winters last November announced plans to axe 15,000 jobs and raised US$5.1 billion in capital as part of a plan to restore profitability and shore up the balance sheet.

"The challenging external environment is not an excuse for our performance. We are not unwitting victims," Mr Winters said.

The lender plans to introduce a new long-term bonus plan for its 200 or so most senior managers that will pay out in 2018 if they meet targets to improve shareholder returns and other strategic objects. Bonuses across its workforce for the past year were down an average 22 per cent.

Standard Chartered's problems began to emerge in 2012, when after a decade of rising profits the lender was hit by US regulatory fines and the start of a prolonged downturn in emerging markets and commodity prices on which much of its fortunes depend.

Unable to reverse the trend, Mr Sands was ousted as CEO in February last year.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 24, 2016, with the headline 'StanChart may claw back senior staff bonus'. Print Edition | Subscribe