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