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Standard Chartered Takes Aim at Mature Markets
The bank wants to win business from U.S. companies looking to expand in emerging markets
By MARGOT PATRICK in London and JULIE STEINBERG in Hong Kong
Updated Feb. 1, 2017 7:14 a.m. ET
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Standard Chartered PLC has a new market in its sights after 150 years financing trade across Asia, India and Africa: the U.S.
The London-based bank may be best known in the U.S. for regulatory run-ins over transactions with customers in Iran and other sanctioned countries. But its new head of corporate and institutional banking, Simon Cooper, wants to win business from U.S. companies looking to expand in Asia, Africa and other emerging markets where Standard Chartered is a major operator.
The country has “many, many clients we’ve just never spoken to before,” Mr. Cooper said in a recent interview. Last year, he and his management team met dozens of customers to find out how they felt about the bank. The broader Americas region has been “underrepresented” within Standard Chartered, Mr. Cooper said.
In October, it hired Torry Berntsen as chief executive head of corporate and institutional banking for the Americas region, with a mandate to hire some more people there, Mr. Cooper said.
Recent wins include helping a big American coffee chain in China convert yuan back to dollars, and guiding a U.S. e-commerce business into Africa.
Right now, the Americas is Standard Chartered’s smallest revenue-producer in a geographic breakdown. Loans to clients in the Americas were around $11.5 billion at the bank at the end of 2015. In the greater China region including Hong Kong, they were $77.7 billion.
The move to tap more mature markets—Mr. Cooper said border-crossing European companies also represent a big opportunity—comes as Standard Chartered is reducing risk in some racier parts of the world. The bank lent billions of dollars to entrepreneurs and businesses in India and Hong Kong, then paid the price when some of the businesses teetered in the commodities slowdown. Since the end of 2014, its commodities exposure has been cut by one third, to $37 billion at the end of June 2016.
Mr. Cooper was hired by Chief Executive Bill Winters last April to help get Standard Chartered back on track after years of overexpansion. He inherited a division that had grown too far too fast, fueled by cheap money pouring into Asia and relationships with a handful of large but risky customers. But cutting loose big clients has meant losing revenue too, something analysts say Standard Chartered can ill afford to do.
Standard Chartered runs the risk of being too concentrated in certain regions, said Chirantan Barua, a banking analyst at Bernstein Research. Expanding the focus on clients in the U.S. and other developed markets is “a diversification strategy that makes a lot of sense,” he said, that will enable the bank to bring developed players to emerging markets and not just other way around.
Mr. Cooper, 49, joined the bank after a 26-year career at larger rival HSBC Holdings PLC. There, he gained a reputation for being ambitious, decisive and blunt. From a start in corporate finance, he took a traditional path for rising HSBC managers with assignments across Asia and the Middle East. He was named a group general manager—an elite ranking within the bank—and was CEO of HSBC’s Middle East and Korean arms before becoming head of global commercial banking in 2013.
He was then just one rung from the top job, held since 2011 by Stuart Gulliver. So his surprise jump to Standard Chartered was seen as an acknowledgment of the stiff competition to replace Mr. Gulliver when he steps down in the next year or two.
Now in a similar spot at Standard Chartered, and running its biggest business, Mr. Cooper is seen as a potential candidate to succeed Mr. Winters—although internal competition exists there too.
The bank also still has a series of legal and regulatory hurdles to get over, including a potential penalty from the U.S. for alleged business with customers in sanctioned countries beyond an earlier period covered by a 2012 settlement. Standard Chartered has said it is cooperating with a probe into possible historical violations.
The bank reports fourth-quarter earnings Feb. 24. Analysts say it could take years for Standard Chartered to get its returns back to acceptable levels while it cut costs and works through its problem loans. Its stock has been buoyed, though, by investors buying it as a proxy for commodities or as a hedge against the pound. Most of the bank’s earnings are denominated in dollars, while its shares trade in sterling.
“We need to focus on growing revenues for this business and improving returns for our shareholders and that’s the focus for this year,” Mr. Cooper said. “But they have to be sustainable returns. We’ve got to mitigate and manage the risks for both credit and financial crime as we grow.”
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