UAE among priority countries for Standard Chartered 

Standard Chartered has outlined a plan to spend more money growing its business in emerging-market countries including the UAE, where the fallout from lower commodity prices has not been as crippling as it has been in countries such as Brazil and Russia.

Bill Winters, the London-based lender’s recently appointed chief executive, highlighted the UAE, India, Singapore, Hong Kong and Africa as areas where the bank would like to focus its efforts as it “shifts capital and power to regional hubs”, the Financial Times reported, citing people familiar with the situation.

Part of the plan will be to empower local managers by removing overlapping layers of leadership as it cuts US$1.8 billion in costs over the next three years, the FT reported.

The move comes as Mr Winters tries to revive the fortunes of the bank, which has been struggling to turn a profit amid a collapse of commodity prices such as oil and regulatory woes that have cost the bank a litany of fines.

A Standard Chartered spokesman in Dubai declined to elaborate on how key the UAE would be for the bank in the future, but over the past year Dubai executives at the bank have signalled their commitment to the country. The UAE is in the top five in terms of revenue and operating profit globally, according to the bank’s former chief executive Mohsin Nathani.

“Bill set out a number of areas he is looking at, alongside the board, in his recent open letter to staff,” a spokesman said. “This includes simplifying the organisation, reviewing our capital strength, improving returns and ensuring we have a strong control environment. We will report back on these areas at the appropriate time.”

Standard Chartered follows HSBC, its main rival in many emerging markets, in declaring a shift in its focus and strategy.

Earlier this month HSBC said it was selling its banking operations in Brazil and Turkey to focus on emerging markets in Asia. It also said its UAE business featured prominently in its growth plans.

In recent years, many other emerging market banks have opened shop in Dubai, the region’s de facto financial hub, as they seek stable growth.

“In an emerging-market context, the UAE is more of a defensive or safe play,” said Taher Safieddine, an analyst at the Dubai-based investment bank Shuaa Capital. “We are still seeing growth, effectively.

“In the UAE, we don’t have this thing, the currency risk. The dirham’s peg to the US dollar works well for the economy in terms of stability, and this is definitely giving some resilience to the banking sector.”

Most of Standard Chartered’s problems have stemmed from the fact that more than 90 per cent of the bank’s business comes from emerging markets, and growth in these commodity-rich parts of the world has slowed in the past couple of years as the price of everything from oil, steel and palm oil collapses amid a drop-off in demand from guzzlers such as China.

At the same time, emerging-market currencies have weakened against the dollar and deficits have widened. Loans to businesses that are sensitive to the fluctuation of commodity prices have also not helped.

Not only is Standard Chartered’s core business of giving out loans suffering, but the bank has also been battling regulatory woes.

It was fined $300m in August by the New York department of financial services for suspicious transactions involving clients in Hong Kong and the Middle East. As a result, Standard Chartered announced in August it would close the majority of its SME accounts in the UAE.

Source: TheNational – UAE among priority countries for Standard Chartered

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