Standard Chartered chief executive told to go

SWITZERLAND — Standard Chartered’s two largest investors have told chairman John Peace to find a replacement for the embattled chief executive, Mr Peter Sands, within months.

The Sunday Telegraph has learnt that Temasek Holdings and Aberdeen Asset Management have said a succession plan to replace Mr Sands must be put in place so that he can leave the bank by the end of the year.

It is understood both investors, who between them own nearly a third of the bank’s shares, have made their wishes known separately in recent weeks. Temasek Holdings is Standard Chartered’s largest shareholder with a 17.7 per cent stake. Aberdeen is second with almost 11 per cent.

The revelations follow months of speculation after a dramatic downturn at the Asian and African-focused bank, which Mr Sands has led for the last nine years. The bank has been hurt by a slowdown in growth in some of its key markets, including specific problems at its Korean arm.

It is thought that investors have failed to identify an internal candidate to replace Mr Sands. Deputy chief executive Mike Rees is thought unlikely to be in line for the role, while chief financial officer Andy Halford, only joined the bank last July from Vodafone with no prior banking experience.

Late last year, Aberdeen chief executive Martin Gilbert appeared to back Mr Sands, suggesting he should be given a chance to execute his turn-around and cost-cutting strategy.

The moves comes despite a recent investor day in which Mr Sands detailed a significant cost-saving programme, and committed to axing most of its global equities business and cutting 4,000 jobs in its retail banking arm, including in Singapore.

Investors have also questioned Mr Peace’s tenure — he has been chairman since 2009 and is also chairman of fellow FTSE 100 constituent Burberry — but are understood to have said it is his responsibility to find a new CEO.

Non-executive director Naguib Kheraj, Barclays’ former finance director, is the most likely option to replace Mr Peace from the current board, but an external chairman may be recruited.

It is thought that if Mr Peace does not act, investors will ask him to step down to make way for a new chairman who will then oversee the executive succession. Some have questioned whether he has the time to chair two FTSE 100 companies, particularly as one is a bank with the size and complexity of Standard Chartered.

At the same time, Mr Peace is known to be in the process of a partial board refresh to buy time. The names of at least one or two new non-executive directors are understood to be with city regulators for vetting. The refresh is likely to see some directors step down.

Stanhope chairman Oliver Stocken has been a non-executive since 2004, while senior independent director Ruth Markland has been on the board since late 2003. Under corporate governance guidelines, a non-executive director is no longer deemed independent after nine years. However, firms can keep directors on if they explain to investors the reasons for doing so.

On Mr Sands’ tenure, a Standard Chartered spokesman said: “Our previous statement is unchanged, Peter is focused on executing the refreshed strategy and has the support of the board in doing this”. On new non-executive directors, he added: “The chairman announced a multi-year refresh of the board in 2011, and we will make any further announcements on this in due course.” The Sunday Telegraph