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Standard Chartered chief executive Bill Winters said an EU cap on bankers’ bonuses had created bad incentives, as the London-based lender used the UK’s abolition of the measure to cut his salary by 40 per cent in favour of boosting his potential bonus.
“The effect of the [bonus cap] was everybody got a grotesque increase in fixed pay,” he said on a call with reporters on Friday. “I say grotesque because it was exactly the wrong incentive to . . . clip coupons and not do a very good job.”
Winters, by far the longest-serving CEO of a UK bank, would this year earn £13.1mn, more than twice what he earned in 2022, if he were to meet all targets, but his basic pay would fall. “I’ll have to explain to my mother why my salary’s been cut by half,” Winters joked on the call.
“My motivation at Standard Chartered has never been about pay,” he said. Instead, he said, it was about being “part of a fantastic franchise”.
Winters’ 2024 pay package of £10.7mn was nearly 50 per cent higher than the previous year because of payouts from an incentive plan.
Chief financial officer Diego De Giorgi’s salary will be cut 33 per cent under the new model, with his total package worth up to £7.7mn if targets are met. He made £2.8mn in 2024.
StanChart said the overhaul, which it announced alongside annual results on Friday, “represents the most significant change for many years” in the way top staff are paid.
Barclays and HSBC have taken similar steps to lower fixed pay for senior executives and increase performance-related bonuses.
The UK announced plans to abolish the cap in 2023, part of a post-Brexit plan to boost the City of London. The EU had introduced the cap as an attempt to curb risk-taking in the wake of the 2008 financial crisis.
StanChart’s pre-tax profits fell 30 per cent in the final three months of last year amid rising costs, even as its wealth and markets businesses generated higher revenues.
The bank reported statutory pre-tax profits of $800mn for the fourth quarter, down from $1.1bn a year earlier and missing analysts’ estimates of $983mn. Its underlying pre-tax profits, adjusted to take into account restructuring and other costs, were $1bn, in line with analysts’ estimates.
Winters said results for the full year, in which reported pre-tax profits rose 19 per cent to $6bn, were “strong”.
“Our strategy . . . is firing on all cylinders,” said Winters, who has run the bank since 2015. StanChart said in October it would double investment in its wealth management business and shift its focus away from smaller domestic clients towards global institutions.
The bank announced a $1.5bn share buyback and said it planned to return at least $8bn to shareholders cumulatively from 2024 to 2026.
Net interest income for the year was $10.4bn, beating the bank’s target of $10.25bn, even as a period of rising rates has come to an end.
StanChart took restructuring charges of $441mn for the year, including $156mn for its cost-saving programme, known as “Fit for Growth”. The bank said last year it planned to save about $1.5bn over a three-year period by simplifying systems.
Its wealth business, a key focus for the bank, reported a 36 per cent rise in revenues for the quarter, while those in its markets unit rose 47 per cent as income from trading jumped.
The bank’s underlying return on tangible equity, a measure of profitability, was 11.7 per cent for the year, up from 10.1 per cent a year earlier. It raised its 2026 target from 12 per cent to “approaching 13 per cent”.
StanChart shares have now surpassed the level they were at when Winters took the helm, having risen more than 80 per cent since he lamented their “crap” price a year ago.
However, the stock still trades at a discount to the bank assets’ book value. Its Hong Kong-listed shares rose 1 per cent on Friday before paring gains to be down 0.4 per cent.
This month, it named Maria Ramos, a current StanChart board member and former chief executive of South African bank Absa, as its next chair.
In 2019, Winters attacked “immature” investors who staged a protest about his pay.