atans1

StanChart: What ST doesn’t tell S’poreans

In Banks, Corporate governance, Temasek on 06/11/2015 at 4:26 am

And neither did BT or MediaCorp.

The constructive, nation-building media should have reported or analysed or quoted analysts that

— Temasek could have prevented the problems from growing out of control by kicking previous mgt’s ass* when yellow lights were flashing Ang moh tua kee isit? HoHoHo);

— the shake-up restructuring plans are underwhelming investors (shares have fallen over 11% this week; and

— the changes will not be that rewarding.

It’s not me, or TRE cybernuts or Uncle Redbean (they too didn’t), it’s the UK’s Guardian that writes:

The big long-term shareholders – Temasek, from Singapore, and our own Aberdeen Asset Management – are obliged to sound supportive, swallow the lack of a final dividend and back the rights issue. But they should also look in the mirror. The market smelled trouble at Standard Chartered for at least two years, but the pressure from the wings rarely rose above the level of mumbles. Temasek and Aberdeen were too willing to believe the boasts from the highly remunerated boardroom about Standard Chartered’s specialness.

The consequences of delay are now horribly clear: a decade of chasing growth will be followed by half a decade of clean-up and cost-cutting. This story could have been different.

http://www.theguardian.com/business/nils-pratley-on-finance/2015/nov/03/standard-chartered-fails-to-realise-resilience-boasts

Yup it could have been different. Temasek has an over 20% stake in StanChart which should give it a strong voice, if it uses it.

And the MSM doesn’t tell us that some analysts are not impressed by the plans to launch a capital raising, cut 15,000 jobs, slash almost 30% of its $10bn cost base and restructure almost a third of its US$315bn risk-weighted assets.

In fact credit rating has juz been downgraded by Fitch Ratings in the latest sign that the new strategy is not being well received.

And finally the MSM doesn’t tell us that the clean-up will not bring great rewards

Yet these rewards are humdrum and distant. StanChart expects return on equity to remain below 10 percent until 2020. That’s no better than troubled investment banks like Deutsche Bank. A further economic slowdown in its main markets, or increased regulatory demands, could throw it off course. Even after a 10 percent drop on the morning of Nov. 3, StanChart shares trade on about 80 percent of tangible book value, after adjusting for the rights issue. With a long slog ahead, it’s hard to see much upside.

http://blogs.reuters.com/breakingviews/2015/11/03/stanchart-faces-years-of-pain-for-humdrum-gain/

Here’s another interesting insight

Never believe a big bank that boasts that its culture is so different: its lending principles conservative, its business immune to the traditional banking vices of over-confidence, over-expansion and bad behaviour.

For a decade, Standard Chartered told us that its rising income and profits flowed from a unique winning formula. Here was chairman John Peace in the annual report a few years ago describing the supposed magic: “2012 was another year of good performance for Standard Chartered, thanks to a consistent strategy, a stable management team, supportive clients, customers and shareholders, and, above all, our great people.”

(Guardian)

——————————–

*It was already unhappy over corporate governance over the number of executive directors on the biard and had expressed its unhappiness publicly by voting against the  reappointment of the executive directors yrs ago when the bank was a jewel in the Temasek portfolio and management were considered geniuses.

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