Standard Chartered Shares Jump as New CEO Winters Draws Upgrades 

Standard Chartered Plc rose the most in two weeks as analysts at Barclays Plc and Sanford C. Bernstein Ltd. upgraded the bank, citing Bill Winters’s hiring as chief executive officer and a diminishing need to raise capital.

“We expect the appointment of a new CEO to mark a turning point for Standard Chartered and see plenty of scope for the business to be refocused with a material improvement in returns,” Hong Kong-based Barclays analyst Sharnie Wong, who raised her rating to overweight from equal weight, said in a note. “In addition, there’s an opportunity to allay market concerns on credit quality and the group’s capital position.”

Winters, 53, a former co-CEO of JPMorgan Chase & Co.’s investment bank, in June will replace Peter Sands, who ran the bank for more than eight years. Sands, 53, lost the confidence of investors after he couldn’t arrest two years of falling shares and earnings that ended a decade of growth.

The shares surged as much as 7.2 percent on Wednesday, the most since the London-based bank’s annual results on March 4, and traded 6.5 percent higher at 9:45 a.m. in London at 1,028 pence. They plummeted about 29 percent in 2014.

Capital Need?

Standard Chartered, which gets the majority of its revenue in Asia, cut its exposure to commodities by $6 billion to $55 billion in the second half of 2014. Additionally, the bank’s high-risk and distressed corporate loans fell to $9.5 billion at year-end from $10.8 billion in the first half, Bernstein said.

“Now that Standard Chartered has actually shown evidence of successful derisking they should be able to convince the regulators they won’t need to issue a capital call,” Bernstein analyst Chirantan Barua said in a March 17 report, upgrading the stock to outperform from underperform. Winters’s appointment is also “a positive catalyst,” he said.

The bank now has 15 buy recommendations from analysts, 13 holds and nine sells, according to data compiled by Bloomberg.

Both Barclays and Bernstein do not rule out the firm raising new capital. A balance sheet review could result in $4.7 billion of new provisions, requiring 3.2 billion pounds ($4.7 billion) of additional equity to rebuild the bank’s capital buffer, Barclays said.

Bernstein’s Barua said he expects a $2.5 billion settlement with the U.S. Justice Department and New York’s Department for Financial Services for regulatory violations, including breaching U.S. sanctions laws and poor money laundering controls. If the settlement comes in higher, the bank may opt to raise $5 billion to shore up its capital, he said.

Source: Bloomberg – Standard Chartered Shares Jump as New CEO Winters Draws Upgrades

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