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Standard Chartered: What the Annual Report tells us

by: (Associate Director, Research and Development) on

Earlier this year, Jason & I blogged around the annual reports of RBS and HSBC. We promised we’d try and take a look at a few more as they crop up.

Standard Chartered (SC) published their Report today, so here’s a whistle stop tour of some of the bits which I thought might be of most interest to ICA students/members. Unsurprisingly, there’s some themes that are common to the other reports linked above.

So here we go, in no particular order. I’ve added links/page numbers as appropriate.

1. Risk Management

As you would expect, there’s a big section. It’s in the main strategic report, page 12.

  • The main risk appetite is discussed, as is the risk management framework
  • The roles & responsibilities of the ‘three lines of defence’ are noted (p13)
  • Particular risk type are highlighted (p14). One of these is Reputational risk.
  • 'Principal uncertainties’ are covered on p15. Here we see that Regulatory Changes and Regulatory Compliance are both identified. The Regulatory compliance section is interesting. It details Board level commitment to Financial Crime Risk, co-operation with reviews and ‘divesting or closing businesses that exist beyond risk tolerances’ (so may mean de-risking? It’s also interesting that this bullet starts with ‘in meeting regulatory expectations’ – as this seems to be a moving target for firms at the moment, who it seems are not necessarily expected by regulators to de-risk whole sectors of business/customers).

2. Ongoing investigations (p103 of the full report)

Although making it clear that SC seeks to comply with the letter and spirit of all laws and regulations at all times, there’s quite a bit of coverage here of when that hasn’t quite succeeded, noting that the outcome can be difficult to predict but ‘material’ to the Group. Mentioned specifically are:

  • 2012 settlement with US authorities re: sanctions compliance
  • August 2014 settlement with NYDFS re: AML transaction surveillance

There’s quite a bit of detail so worth a read, in particular around the DoJ extending the DPA provision in 2014.

If you jump down to Note 43 on p 303, there is an additional statement around the provision of liabilities for potential claims against in in the ‘normal course of business’. No figures are given but it is estimated as not being ‘material’.

(I’ve never run an international Bank so I guess one man’s ‘material’ is another man’s ‘not material’?)

3. A great place to work

standard charteredFinally, let’s focus on good news. Skip back up to p11 of the strategic report.

“Aim: To continually align the aspirations of our people with those of the Group, encouraging a performance-oriented culture and a place where people love to work”.

Following an employee survey: “strong scores were registered for the Group’s brand, strategy and culture, with particularly positive results on individual commitment, conduct and job engagement”.

Interesting that the word ‘conduct’ crops up. It’s a massive buzzword and I’m not exactly sure what it means here. I think it means that employees feel they/SC act in the correct way. Either way, it’s being taken as a positive, so seems a good way to wrap up this blog.

Hope this is useful?

We’ll keep an eye out for others coming up and try to bring you the highlights (well, albeit as we see them!)

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February 19, 2016 11:28


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