Lloyds, HSBC Executives Seen as Favored for StanChart CEOStephen Morris and Ambereen Choudhury
Lloyds Banking Group Plc Chief Executive Officer Antonio Horta-Osorio is among Standard Chartered Plc shareholders’ preferred candidates to take the bank’s top job, according to two people with knowledge of the matter.
Horta-Osorio, 51, is favored to succeed Standard Chartered CEO Peter Sands after more than doubling Lloyds’s market value over the past three years and helping cut the government’s stake in the lender, said the people, who asked not to be identified because the deliberations aren’t public. HSBC Holdings Plc’s U.K. CEO, Antonio Simoes, 39, is also seen as a potential replacement, they said. They are both Portuguese.
Sands, 53, has struggled to restore investor confidence amid faltering earnings and a 29 percent slump in shares last year. With Singapore’s Temasek Holdings Pte and Aberdeen Asset Management Plc, the two largest shareholders, pressing Chairman John Peace to develop a succession plan, the London-based bank has hired executive search firm Egon Zehnder to help find a new CEO, a person familiar said earlier this week.
“We believe that a top leadership change is a necessary step to move the bank’s restructuring decisively forward,” James Antos, an Hong Kong-based analyst at Mizuho Securities Asia Ltd., said in a note on Jan. 28. He upgraded Standard Chartered shares to buy from underperform, citing the potential management change.
Rob Whitfield, head of Sydney-based Westpac Banking Corp.’s institutional bank, has been informally sounded out about his interest in the job, the Australian Financial Review reported Thursday, citing London banking sources.
Standard Chartered shares fell 4.2 percent, the biggest intraday decline since October, to HK$106.30 at 11:59 a.m. in Hong Kong on Thursday. The stock closed 3.9 percent lower at 905 pence in London on Wednesday.
Spokesmen at Standard Chartered, Lloyds, HSBC and Westpac declined to comment. Simoes didn’t return calls seeking comment.
Standard Chartered may find it difficult to poach Horta-Osorio after the CEO “absolutely” committed his future to Lloyds for the duration of the lender’s three-year restructuring plan, which was announced Oct. 28. Simoes was promoted to deputy CEO of HSBC Bank Plc in 2012. He currently oversees all of the bank’s British operations as U.K. CEO.
Lloyds reported a 41 percent jump in third-quarter profit, beating analyst estimates, and announced plans to cut 1 billion pounds ($1.5 billion) in costs by 2017. By contrast, Standard Chartered, which makes about three-quarters of its earnings in Asia, posted a 16 percent drop in pretax profit for that period.
Standard Chartered’s shares are down about 6 percent in London this year. Sands pledged on Jan. 8 to eliminate 4,000 jobs, shut equities trading and save about $400 million in expenses, in the bank’s most aggressive cost cuts to date. The bank will release full-year earnings on March 4.
Standard Chartered is also using recruiting company Spencer Stuart to search for new executives for its board, one of the people said. An announcement on the succession plan may be made as early as next month, with a new CEO likely in place by the end of the year, the Financial Times reported earlier this month, without saying where it obtained the information.
Like Sands, Simoes is a former partner at consulting firm McKinsey & Co. He joined HSBC in 2007, overseeing the bank’s group strategy and merger and acquisitions activities, before being appointed chief of staff to the group CEO in 2009 and relocating to Hong Kong. He was appointed group general manager in 2011 and was made head of the retail banking and wealth management business for Europe a year later.
Internal candidates to replace Sands could include Viswanathan Shankar, currently CEO of Europe, Middle East, Africa and Americas, and Mark Dowie, head of corporate finance, may also be under consideration, one of the people said.
“Interestingly, there has been no indication that internal promotions will fill potential gaps,” said Sandy Chen, a London-based analyst for Cenkos Securities Plc, who has a buy recommendation on the shares. “There isn’t much perceived strength or depth in Standard Chartered’s executive bench.”