Standard Chartered scrapped all annual bonuses for its bosses and made no long-term awards to former chiefs under previous bonus schemes as its profits plunged by 84 per cent. The emerging market-focused bank also said it might claw back bonuses from current and former senior staff if they turned out to have been responsible for “clear-cut cases of malfeasance” or “gross negligence”, such as knowingly overstating earnings. New chief executive Bill Winters said: “The challenging external environment is not an excuse for our performance. We are not unwitting victims. Rather, the external challenges increase our urgent need to take all necessary steps to address the structural and operational issues we have identified as critical to improving returns.” The bank saw its pre-tax profits drop from £5.2bn to just £834m as its revenues fell 15 per cent to £15.4bn. The biggest hit to profits was an 87 per cent rise in bad debt writedowns to £4bn. Winters said: “While 2015 performance was poor, the actions we took on capital throughout last year and in particular in December have positioned us strongly for the current macro environment. We have a balance sheet that is resilient and we are in the right markets. We have identified our risk issues, and are dealing with them assertively.” He said that more than 100 senior people had decided not to take annual cash bonuses this year, and that the money saved had been used “to protect more junior staff”. The bank cut 7,000 posts last year as part of its plan to reduce numbers by 15,000. Previous management, including former chief Peter Sands and former finance director Richard Meddings, will collect nothing on long-term share awards made in 2013, as none of their performance targets had been hit. “Exactly the same will happen to Andy [Halford, finance director] and me if we don’t hit the 2018 targets set for us today,” Winters said. The annual report showed that Winters, who arrived in the summer, was paid £2.34m last year, and given share awards worth up to £8.4m, while Halford received £2m in pay and up to £5m in share awards. Even this much-reduced profit was less than analysts had expected, and Standard Chartered shares fell 6.73 per cent, or 29.35p, to 406.95p. There is no dividend.
Standard Chartered may claw back bonuses from up to 150 senior staff after reporting its first annual loss since 1989; CEO Bill Winters added that the executive directors would not be penalised as they have already had their bonuses withdrawn for this year. He also revealed that reviews into whether individuals breach compliance or risk-related rules that led to the bank's underperformance could lead to further clawbacks of bonuses paid out in the past. The surprise annual loss shows the scale of the task facing Mr Winters as he tries to restore revenue growth and repair the bank's balance sheet riddled with bad loans made under previous CEO Peter Sands' expansion-oriented strategy.