The Bank of England has forced Standard Chartered to strip its finance director, Richard Meddings, of his responsibility for risk at the emerging markets focused lender
The Bank of England has taken unprecedented action to strip a senior banker of key responsibilities due to concerns over potential conflicts.
Richard Meddings, group finance director of Standard Chartered, has been forced to give up oversight of the lender’s risk department under pressure from officials at the Prudential Regulation Authority (PRA), which is run by the Bank of England.
Mr Meddings is one of the most respected finance directors in the FTSE 100, and the PRA’s action is a sign of the tough approach being taken by regulators to ensure direct lines of accountability at the top of Britain’s largest banks.
The PRA is understood to have told Standard Chartered, the emerging markets focused bank, that it was “not happy” with Mr Meddings’s role, leading the lender last month to confirm it would hand responsibility for risk to its chief executive, Peter Sands.
The move is likely to cause shockwaves in the City as Standard Chartered got through the financial crisis without any taxpayer support and Mr Meddings was one of the main architects, along with Mr Sands, of the 2008 rescue of the British banking system.
One source with knowledge of the talks between the PRA and Standard Chartered said the regulator decided to act as it was concerned about the potential conflict between Mr Meddings’s finance responsibility and his duty to oversee the risk operations.
A spokesman for Standard Chartered stressed the risk unit would continue to be run by Richard Goulding on a day-to-day basis, adding: “This governance change ensures we are well placed to meet future regulatory requirements.”
Earlier this month, Standard Chartered warned its profits were unlikely to meet market expectations as it signalled the end of a decade-long run of record profits.
The profit warning followed a difficult 12 months for the bank in which it was fined $667m (£409m) in the US after an investigation into money-laundering found it had broken sanctions with Iran and other rogue states. More recently the lender took a $1bn writedown on its struggling Korean business, which has been hit by a series of labour disputes.
The interventionist approach taken by the PRA comes as regulators look to ensure important areas such as risk management are properly accounted for in the wake of several reports into the financial crisis that have recommended changes to the way senior bankers are overseen.
The final report of the Parliamentary Commission on Banking Standards called for a new approval regime for senior bankers that would see executives regularly reviewed if they took on additional responsibilities.
Andrew Tyrie MP, who chaired the Commission, said the PRA’s action against Standard Chartered was a welcome development.
“The risk function is crucial in banks and it’s equally crucial the job should be done at a senior level, in that a person should know they are personally responsible. It looks as if the regulator is pushing in the right direction,” he said.
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