Standard Chartered Names Vinals Chairman to Succeed PeaceBy
Jose Vinals will start Dec. 1, most recently worked at IMF
Chairman will be based in London and earn 1.25 million pounds
Standard Chartered Plc named International Monetary Fund executive Jose Vinals its next chairman, ending a 17-month search to find a replacement for John Peace.
Vinals, a former deputy governor of the Central Bank of Spain, will join the board on Oct. 3 and start as chairman on Dec. 1, according to a statement Wednesday from the London-based lender. The 62-year-old is currently director of the monetary and capital markets department of the IMF and will relocate to London, where he’ll earn 1.25 million pounds ($1.6 million) a year.
The new chairman joins Chief Executive Officer Bill Winters’ rebuilt management team after several years of climbing impairments and fines culminated in the first annual loss since 1989 last year. In his first 13 months in charge, Winters has replaced several senior executives and cracked down on ethics within the bank after discovering some employees were acting “above the law.”
Vinals has experience working in Asia and the Middle East from his time at the IMF and as a member of the steering committee of the Financial Stability Board, according to Naguib Kheraj, who led the search and is becoming deputy chairman in addition to his role as the board’s senior independent director.
“He’s very very familiar with China, Hong Kong, Singapore, India, Korea -- these are all places he’s studied in great detail and visited multiple times and he knows all the key players in those markets,” Kheraj said on a call with reporters. “He’s been colleagues with a number of Asian central bank governors”’ and “when we referenced him with key decision makers in those countries, we’ve had very positive feedback. They all know him.”
The bank is still under the scrutiny of an independent monitor as part of a 2012 deferred prosecution agreement, when it was fined $667 million for violating U.S. sanctions by engaging in $250 billion in transactions with Iran. It was also rebuked by Singapore’s central bank this month for lax anti-money laundering controls related to Malaysia’s scandal-riven investment fund, 1Malaysia Development Bhd.
"Jose Vinals has been appointed due to his financial regulation expertise and his experience with dealing with finance ministers and central bankers around the world,” said Hugh Young, Asia managing director of Aberdeen Asset Management Plc, Standard Chartered’s second-largest shareholder. “This seems sensible given the huge amount of contact banks generally have with policy makers and the scrutiny they are currently under.”
Kheraj said the Bank of England, who had to approve Vinals’ appointment, was not concerned about his lack of direct experience at a commercial bank or other financial institution.
“There have been many precedents of people going from finance ministries or treasury roles that have gone on to chair banks successfully,” Kheraj said on the call. He has “technical competence and knowledge of many areas of banking” and “when we discussed strategy he asked good questions on return-on-equity and the relationship between risk and reward.”
The bank had previously offered the job to former Australia and New Zealand Banking Group Ltd. CEO Mike Smith, only to be turned down, people familiar with the search have said. Smith rejected the role in part because he didn’t want to relocate to London.
Addressing the amount of time it took to find a replacement for Peace, who has been chairman for seven years, Winters and Kheraj denied Vinals was the last man standing in the search and said he was their preferred candidate.
“Certainly what I’ve felt is an extraordinary level of excitement at the changes he’s making,” the CEO said on the call. “We didn’t have to pull him by the nose.”
Though based in London, Standard Chartered, which reports first-half earnings next week, makes almost all of its money in Asia, the Middle East and Africa. Winters said the bank was not considering moving its headquarters from the U.K. even after the country voted to leave the European Union last month.
“The issue of the domicile of the bank is not on the table, ” Winters said. “We have much more important issues to deal with. If circumstances change we may have to reconsider our position, but we very much hope that won’t be the case.”
— With assistance by Sarah Jones