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How Standard Chartered Fixed a Bank in Crisis
How Standard Chartered Fixed a Bank in Crisis
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0:00
What do you do when the house is already on fire?
0:04
We cut expenses, we streamlined the management structure,
0:06
we exited a couple of businesses, but, you know, it was tough.
0:08
When bad debts are rising, regulators are circling and the culture is slipping away.
0:15
There was a core of really strong people in the bank,
0:17
and then there were people that I sometimes not so affectionately refer to as mercenaries.
0:21
So, what did you do with these mercenaries?
0:22
I fired them.
0:29
In 2015, Bill Winters took over Standard Chartered at one of the most fragile moments in its history.
0:37
Before Winters stepped in, Standard Chartered was struggling,
0:40
grappling with a toxic mix of rising bad debts, ballooning costs, and high stakes legal battles.
0:47
The fallout was swift.
0:50
Investor confidence evaporated with the bank's share price falling 40%
0:55
in the years leading up to his appointment.
0:59
Rewind back to 2015 when you first stepped into Standard Chartered. What was the first
1:04
thing you did that told people this was the start of a new era, things had to change?
1:09
I had the view that it was really a great company that had lost its way a little bit,
1:13
or maybe a lot. And you know I came in in the beginning,
1:17
did the work that we all do when you first come in just to understand things and get to know people.
1:21
And what did you find?
1:22
So, the obvious things from the outside were the bad loans, there were a few hummers there
1:28
in the book that were that were quite well understood. The bank had had some problems
1:31
in financial crime compliance, had gotten on the wrong side of the US authorities,
1:35
had been sanctioned and you know had monitors and a big remediation program.
1:39
There was kind of a generalized looseness around controls, and
1:44
you know my first step was to just try to tighten things up.
1:47
Put out these little fires that you found.
1:49
Little fires but also just to set a different tone in terms of, so I think that the bank
1:53
had had overemphasized growth and to basically feed that sense, and underemphasized controls.
2:01
Standard Chartered may be headquartered in London
2:04
but its business is firmly rooted in Asia, Africa and the Middle East.
2:09
Nearly three quarters of its $530 billion dollars in customer deposits come from these markets,
2:16
which meant when problems hit, they weren't contained in one place. They were everywhere.
2:23
Were people receptive to what you were proposing, how did you handle
2:27
what must have been resistance within the company? People who didn't want to change.
2:31
There was some of that for sure. And yeah,
2:33
I think that there were a few things sort of culturally that were going on.
2:36
There was a core of really strong people in the bank that had been there for a long time,
2:40
and then there were people that I sometimes not so affectionately refer to as mercenaries.
2:44
Mercenaries?
2:45
Yeah, I mean they came in they did things that were not really value-accretive for
2:51
shareholders. They took risks that were not really appropriate. They got paid big bonuses.
2:56
So, what did you do with these mercenaries?
2:58
I fired them immediately.
2:59
You fired them.
2:59
A lot of them left before I came because they knew it was coming. And the ones that were left,
3:03
they went because I found that the people who had stayed around through that less
3:08
controlled period felt a bit liberated. Of course, it was hard because we cut expenses,
3:12
we streamlined the management structure, we exited a couple of businesses and,
3:16
nothing major, but you know, it was tough for people that were here.
3:19
Now, as it happens, I probably went too far because in fact...
3:24
You went too far?
3:24
Probably.
3:26
Winter's early days at Standard Chartered did little to calm investors. In fact,
3:31
the share price continued to fall as markets reacted to fears of a global
3:36
slowdown and his sweeping restructuring plans.
3:40
The previous you know administration in the bank had realized that there were problems
3:44
and had begun to tighten things up. I came in and tightened things up further. So,
3:48
we actually hit the brakes pretty hard. Balance sheets shrunk a lot, earnings dropped a lot.
3:52
Did we overdo it? We'll never know, you don't get to rerun
3:54
these things. I may have overdone it a bit, but we definitely had the benefit
3:58
at that point of starting from kind of a rock solid foundation which was low,
4:02
and then we just built steadily over the subsequent eight, nine, ten years and we're
4:06
sitting here today with a very, very strong business, good momentum, good stock price.
4:12
The reset played out most clearly in Asia.
4:17
In your ten years as CEO running Standard Chartered,
4:19
how fast has the Singapore market grown for the bank?
4:21
When I joined Standard Chartered, Singapore was a good franchise that
4:25
wasn't actually making any money. And the colleagues, who are still here,
4:29
who just said we can make Singapore the strong market in Standard Chartered and
4:34
they've done a really good job. So now Singapore is catching up to Hong Kong as our largest market.
4:38
There's always a healthy competition between Singapore and Hong Kong. Do you
4:41
think there's a chance that Singapore might overtake Hong Kong one day?
4:43
Well, first of all, I love the competition between Hong Kong and Singapore because it
4:47
makes them both very strong and each getting better and better and better,
4:50
but they're different. They're both global financial centers, but Singapore is a hub
4:54
for ASEAN with a strong connection to China, and Hong Kong is a hub for China with a strong
4:58
connection to the rest of Asia. So, they actually complement each other quite well.
5:02
A decade on, the crisis may be over, but the next challenge is already here.
5:08
We're sitting here today in the I'd say the early adoption of AI as a super powerful tool for
5:14
customer satisfaction and corporate productivity. You know that that requires a whole different set
5:20
of mindsets, investments and we don't think we're ahead of the game in AI, we don't think
5:26
we're behind either. We think that we're all in a race right now and we have to stay relevant.
5:33
A huge preoccupation for us right now, thankfully something that we've been thinking about for the
5:37
better part of eight or nine years now, is the digitization of money. We've got a fundamental
5:41
view that all money will be digital, and all financial assets will settle on blockchains.
5:47
Let's talk about the external environment. You've said that the current ongoing U.S.-
5:52
China tensions haven't really hit your business, but yet at the same time, your clients are telling
5:57
you there's increased cost of doing business and there's supply chain disruptions. Can Standard
6:01
Chartered really be immune to geopolitics when your clients are feeling the pain?
6:06
No, no, and we're not immune, just to be clear. There's definitely a reconfiguring of supply
6:10
chains. There has been a reconfiguring of supply chains for the past decade.
6:14
China started as a low-cost low value-added manufacturer that was less concerned about
6:20
pollution, I mean going back 10 or 15 years, into a high value-added manufacturer that's
6:25
very focused on the climate agenda and both emissions and quality of life.
6:29
And so inevitably jobs were moving out of, low value-added jobs were moving out of
6:33
China into other locations. And we saw that countries like Vietnam, Thailand, Malaysia,
6:38
more recently India, have been beneficiaries of that. It changed further with the tariff
6:44
wars that have subsequently, the trade wars that have subsequently broken out.
6:47
So our clients are feeling lots of anxiety and of course there's been
6:50
some compression of profit margins, in particular on the back of tariffs.
6:54
Our job is to help our clients through those challenges that they face and we're doing that,
6:59
and if we do a good job, they find a way to pay us, which is why our profits have been very strong
7:03
and it's because we're solving their problems not because we're taking advantage of their pain.
7:08
Investors can be rather vocal, they can be rather demanding. They want faster
7:12
returns. They want bigger buybacks. They want higher dividends. How do you
7:16
balance delivering these short-term demands versus this long end-game of transformation?
7:22
First and foremost, we're looking at how we create the most value in the medium to
7:26
long-term for the bank. So, you know, the investments that we made in, for example,
7:29
in our ventures lab, they don't generate anything in terms of, in fact, they're a
7:32
short-term negative for long-term gain. As we sit here today, I'm really happy that we invested in
7:38
digital assets seven years ago, you know, five, six, seven years ago, and continue to invest.
7:42
So, the efforts are paying off.
7:43
And now we're seeing the value. So, now we're seen as a leader in the new world of digital money.
7:48
Did you know what you were getting to during that time when you were investing
7:51
in digital assets? Was it a gamble on your part? Was it a gut instinct?
7:54
It was all of the above. So, I think we had some ideas on the direction things could go. So, we had
7:59
a sense that being, if I could use the basketball analogy, being around the hoop - so, just
8:04
investing in things that were going to help us to learn and understand the way markets could go.
8:08
But, you know, of all the ventures that we built, and we'd built dozens at this point,
8:12
none of them had gone in a straight line. You know, whatever the original business plan was,
8:15
we've pivoted one, two, three, four, five times. Some haven't worked,
8:19
some have worked spectacularly and we've realized big gains and some are works in progress,
8:24
but very different than what we imagined when we started them two, three, four, five,
8:27
six years ago, and that's what venture building is about and that's what innovation is about.
8:31
You know in those times as CEO, being human is always challenging. What's the
8:35
one lesson you've learned about empathy, the hard way, when dealing with people.
8:40
Personally, I think that empathy is one of the two key characteristics of leadership,
8:44
the other being curiosity, and they feed off each other.
8:48
So, my hard lessons? I think where we've moved too fast in some cases and not made
8:55
the investment to understand how clients may react or how local colleagues may react,
9:01
especially the ones who are staying behind, who then feel vulnerable for whatever reason,
9:07
I wished that we invested more upfront in understanding.
9:10
But thankfully, I think the bias in this organization, I'm pretty sure that my personal
9:14
bias, maybe to a fault, is to overindulge in terms of the communication upfront, the transparency...
9:22
What do you mean by overindulge?
9:23
So, you know we have all these, like every company we have continuous feedback
9:27
mechanisms. And you know, when I look at the feedback I get from my colleagues,
9:30
people will say sometimes, oh you know Bill we wish you'd be
9:32
a little bit faster in decision-making or a little bit harsher in dealing with...
9:37
Really?
9:37
Yeah.
9:38
Those were the feedback you were getting?
9:39
Sometimes. You know, I get you're too fast and you're too harsh. I mean,
9:43
you get everything. Sometimes you're very deliberate in your decision-making and
9:49
you overindulge an individual in terms of getting to know them or, you know, maybe you could do
9:54
less of that. I say, okay, that's fine, when you run the bank, you can do things your way.
9:57
You say that to them?
9:58
Of course. Thank you for the feedback and I do reflect on that all the time,
10:02
I try to course-correct. Look, I've been in banking for 42 years. I can tell you I'm learning
10:08
as much today as I did in 1983 when I started at what was then called the Morgan Guaranty Trust
10:13
Company. I'm learning more today actually than I did then because I have more to learn. And
10:18
maybe as you get older, you realize how much you don't know, in addition to how much you do know.
10:23
When you're 23, you think you know everything, when you're 35,
10:26
you're sure you know everything, and at 64, you realize you actually know almost nothing.
10:31
So, I love learning. I love continuing to learn
10:34
and that means improving myself and I know that I've got more that I can do.
10:37
People at Standard Chartered are going to look back at the Bill Winters era.
10:43
What do you hope they'll say what you stood for?
10:46
That they see a culture and a bank that plays to all of the
10:52
core strengths of Standard Chartered but is absolutely fit for the future.
10:57
So, at the cutting edge of the future of finance - I feel that we're there right now,
11:01
but I also feel that there's a very strong connection to our heritage, to our culture,
11:06
to that unique diversity, which is Standard Chartered.
11:08
Global and local, in 55 markets around the world, with 160 nationalities walking through
11:14
the hallways of this building, etc., etc. And there aren't that many companies that can say,
11:20
"Yeah, the heritage is so clear in that company today, but it's totally fit for
11:26
the present and the future." That's what I would love to do. There's more work to do as always.
11:30
What do you hope they'll say about Bill Winters as a person?
11:33
I hope they'll say that I was a really good custodian of that process,
11:37
of reinforcing the very strong roots and the unique nature of our bank,
11:43
but also positioned it very well, you know, a future-thinking, future-looking professional.
11:48
I also hope people think that I've been true to my core values
11:52
and true to the core values of the company which are perfectly aligned.
11:55
Bill, thank you so much for talking to me.
11:57
Thank you.
